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RUN IT LIKE A BUSINESS?
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You wilt often hear this said when voters
elect a new governor, a new legislator or a
new county commissioner. The newly elected
official will proclaim: “I want to run govern
ment like we run a business."
That statement is usually followed by a
decision to outsource or privatize something
that local government had been doing so
that the service is now provided by a private
business.
The theory is that a private business will
deliver a service more efficiently than a gov
ernment agency can, so the taxpayers will
always save money. It's*a nice theory, but in
real life it often does not work out that way.
The cost of providing a government ser
vice can dramatically increase when
a private business takes over. This
happened two years ago when
Gov. Sonny Perdue outsourced
state government's computer and
telecommunications services to
IBM and AT&T.
"I look forward to our partner
ship in providing the state better
services than we have today at a
cost savings to the taxpayer," Perdue
said.
There were no cost savings to the taxpay
ers, however. Under the new contracts, the
money spent on computer equipment and
services by state agencies increased by several
million dollars. That irritated legislators who.
had to balance the budget to account for this
unexpected bump in spending.
"At this point, they (the private contracts)
are not saving money," said Rep. Carl Rogers
(R-Gainesville) during the last legislative ses
sion. "It's an added cost."
Another entity to learn the hara truth
about running government like a business
is the Board of Regents. Back in 2006, the
regents hired a businessman to be the new
chancellor of the University System. Erroll
Davis had been a top executive at Wisconsin
Power & Light, and the thinking was that his
CEO background would enable the University
System to reap the benefits of being operated
like a business.
Davis made a business decision that
the University System could save money by
consolidating all of the payroll and benefits
functions that had been handled individu
ally by the colleges. The University System,
Davis said, should buy an expensive computer
system from a New Jersey company to man
age these payrolls from a central location. The
money saved by implementing the new system
would pay for it within three years.
Once again, reality trampled upon all of
the rosy scenarios. Internal auditors from the
University System recently reviewed computer
operations to see if the regents were get
ting all of the cost savings they had
been promised from the new payroll
system. Auditors discovered that
the new system had resulted in
savings of about $10 million
since the implementation began
in 2008. But the costs of imple
menting tne system had totaled
nearly $32 million during that
same period—leaving the project
$21.6 million in the red. Auditors
also concluded that the new payroll sys
tem may not even be the right one to handle
payrolls for the state's public colleges.
"We do need to ask the question of
whether this is the correct system, and, if it
isn't, be prepared to move to something else,"
said John Fuchko, the University System's
chief auditor.
"Nobody ever said to me we'd spend north
of $30 million to save $10 million," said board
member Richard Tucker. 'That's not a business
decision that I would have voted for."
I'd like to offer some free advice to the
new governor: be very careful about trying
to run state government like a business. You
may think you're going to save a lot of money
by outsourcing, but it can also be much more
expensive for the taxpayers.
Tom Crawford tcrawford@gareport.com
by TOM TOMORROW
THE NEW
BIPARTI
SANSHIP
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6 FLAGPOLE.COM • DECEMBER 1,2010
WHAT’S UP IN NEW DEVELOPMENT
Loosely Tied Together: How to link Rick "The
Printer" Hawkins' dilapidated buildings with
Power Partners' factory floor and Witold
Rybczynski's advice about urban planning?
Read on...
Dilapidator: Rick Hawkins doesn't think there's
anything wrong with the fact that he owns
vacant, dilapidated buildings. Earlier this
month a fire gutted one of his buildings—the
storied Print Shop at 376 Oconee St.-^here
in Athens. In nearby
Lexington, where
Hawkins owns five
unoccupied and dete
riorating buildings
across the street from
the beautiful old court
house, a new downtown
development authority
there is pushing him to
make basic repairs.
I called Hawkins to
ask him what responsi
bilities he thinks own
ers have for repairing
dilapidated properties.
He wouldn't talk on the
record, though I can.
report that he doesn't
seem worried about the condition of his prop
erties. But we should be worried.
There are the obvious public safety and
nuisance concerns. Dilapidated buildings can
become fire hazards. They invite rodents.
Criminals find them cozy. Their leaking roofs,
crumbling walls and burst water pipes spread
their decrepitude to adjacent buildings. But
that's not all that we have to worry about.
They can depress property values. Scare off
potential investors. And rack up lots of fire,
police, legal and demolition bills—most of
which are paid by local taxpayers.
According to John Spagna, administrator of
Athens-Clarke County's Community Protection
Division, there are currently 106 properties
in Athens that have been cited as nuisances.
Some are vacant and have been used in con
nection with drug crimes; some are danger
ous to the health, safety and welfare of their
inhabitants or neighbors; and some may even
tually be recommended for demolition.
The old Print Shop on Oconee Street is on
this nuisance list, but Athens-Clarke County
Attorney Bill Berryman >ays he hasn't yet
decided what—if any—action to pursue
against Hawkins. Berryman points out the
property is not immediately adjacent to
any homes and that spending limited legal
resources to protect other occupied homes is
his priority. That seems like the right priority
to me, but when the economy improves, I'd
like to see the city devote more resources to
returning as many parcels as possible to
productive use as quickly as possible.
Athens has been making progress toward .
that goal. New rules limiting how long owners
can board-up vacant buildings, a more asser
tive county attorney's office and a new Land
Bank Authority, which can acquire properties
in tax foreclosure proceedings and then trans
fer them to affordable housing providers, are
all steps forward. So is talk about creating a
redevelopment authority with broader powers,
including the ability to issue bonds to fund
larger-scale projects.
Apart from trying to minimize safety
hazards and damage to the values of neigh
boring properties, why 1s this a goat worth
pursuing? I'll answer that, but first let's take
a detour.
Seeing Is Appreciating: Two weeks ago I took
a tour of local industries organized by the
Athens Chamber of Commerce.
Our tour group—with people from local
businesses, the media, the school system and
local government—stopped at five places:
Eaton Corporation, which manufactures engine
components; Merial Pharmaceuticals, a maker
of drugs and treatments for pets; Athens
Research and Technology, which does cus
tom protein purification; Carrier Traniscold,
a manufacturer of climate control units for
trucks; and Power Partners, makers of electri
cal transformers.
What struck me on this tour was that all
the tour guides talked about how important
the use of factory floor space was. They
emphasized how assembly lines had to be
designed to encourage productivity and at the
same time facilitate communication among
line workers and managers. Where there were
idle spaces on factory floors, the tour guides
almost always rattled off how the spaces were
soon to be used for new product lines or re
configured for other uses.
In their need to maximize value from fixed
amounts of space, cities are similar to factory
floors. Just as idle floor space can represent
missed opportunities for manufacturers, so
can under- or misused properties for a city. To
stay vital and grow, cities need every parcel
within their limits to contribute value. That's
why returning parcels to productive use should
be a top priority for Athens.
Rybczynski's Advice: Witold Rybczynski, the
architect and best-selling author, was in town
last month to give a lecture at the University
of Georgia and promote his new book,
Makeshift Metropolis: Ideas about Cities. He
offered sound advice in his talk: don't embrace
big, sweeping plans for cities, but do support
smaller-scate plans that give people what
they want and are rooted in what we know
works. That includes parks and views near
water, livety streets, mixed-use developments,
neighborhood parks, old buildings, lots of
shopping opportunities and density. Or, to put
it another way: cities work best when they're
compact and dense, but people like them bet
ter if there's a little "garden" mixed in. It's
important to remember this "garden* Mt
Cities are not just machines for productivity;
much of their value comes from simply being
pleasant places to live.
Dan Lorentz athensrsing@fiagpote.com
DAN LORENTZ