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My View: Paying for public-private partnerships

February 25, 2017 GMT

When something seems too good to be true, it probably is. This is the warning our legislators need to heed so that New Mexicans don’t pay the price for mass privatization of our public services. A bill that could privatize New Mexico’s critical public services, like water (House Bill 275, sponsored by Rep. Larry Larrañaga and Sen. Carlos Cisneros) will be heard by its second committee in the New Mexico House of Representatives on Saturday. Public-private partnerships, or P3s, range from a company designing and constructing a new school to a government contracting with a company to operate and maintain a road or a water utility.

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Private companies are pushing hard to expand P3s in our state. HB 275 is identical to the version that did not pass in 2015. Again, the proposal is one of the broadest, if not the broadest, pieces of P3 legislation in the country in terms of scope of authorized projects, breadth of governmental entities involved, lack of oversight (legislative and executive), lack of public transparency and financial risks.

Sadly, it’s not surprising that after the state has handed huge tax breaks to corporations over the years and can no longer afford to keep up with infrastructure needs, some lawmakers mistakenly think that we should let private corporations cash in on these needs by building or operating much-needed infrastructure.

HB 275 is a bad deal for New Mexico. In addition to the broad definition of “public projects” that are subject to privatization, HB 275 specifically lists dams, reservoirs, sewerage or water treatment facilities, water pipelines, habitat or environmental restoration, power plants, and other basic, essential environmental assets.

When governments seek to privatize these services, the reality is that taxpayers get the short end of the stick and pay the true costs.

In Wisconsin, a private company was contracted for $335 million to run Milwaukee’s sewer system for 10 years. The company cut the workforce by almost one-third and improperly maintained the system, resulting in at least 20 contract violations. Over a two-year period, 107 million gallons of raw sewage leaked into waterways; three years later, an unprecedented 4.6 billion gallons of raw sewage were dumped from the system.

A different company was contracted to operate and maintain the water utility in Indianapolis for 20 years for $1.5 billion. The result was that consumer complaints more than doubled, inadequate safeguards by the company forced a boil-water advisory that closed businesses and schools, and the company was investigated by a federal grand jury for falsifying water quality reports. In the end, taxpayers had to pay millions of dollars to bail out the project.

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These examples show the true cost of these projects. The fact is that the money comes from taxpayers, whether it’s future tax dollars the government commits, fees paid by users of the project or a multimillion dollar bailout.

Generally speaking, the more heavily the private sector is involved, the riskier the project is for the public — in financial, social and environmental terms. Examples from across the country have proven the need to take a very cautious approach to P3s.

P3s require a narrow, prudent approach that will provide opportunities for public benefit without posing substantial financial, social or environmental risks — such as Senate Bill 143 sponsored by Sen. Michael Padilla — but HB 275 doesn’t come close.

New Mexico needs jobs, and we support job creation efforts. But “blank check” legislation like HB 275 is not the answer for our state.

Contact your representative, especially if they sit on the House Labor and Economic Development Committee. Tell them to keep our public utilities in public, accountable hands.

Ben Shelton is the legislative director of Conservation Voters New Mexico, a statewide, nonpartisan organization. It connects the people of New Mexico to their political power to protect our air, land and water for a healthy Land of Enchantment.