A local taxpayers group, which champions the need for more private industry in public business, released a study Thursday claiming that the city and county of Los Angeles could save more than $740 million annually if they contracted out more government services to private firms.
The nine-month study, commissioned by the Los Angeles Taxpayers Assn., estimated that the city of Los Angeles could realize $440 million in savings by turning to private business to handle municipal services ranging from street sweeping to garbage collection.
The study maintained that the county, which now contracts more than $719 million in services to private firms, could save another $300 million annually by accelerating its "privatization" program in such areas as health services.
"This report shows that contracting does work, and the city and county should be doing more," said Arch Hardyment, president of LATAX, a pro-business group that was established in 1979.
The organization is made up of about 230 big and small businesses and individuals in the county, and its influence was reflected in the audience that attended Thursday's luncheon at the Biltmore to announce the results of the $50,000 study.
The 60 luncheon guests included county Chief Administrative Officer Richard B. Dixon and deputies from several county supervisors, as well as representatives from City Administrative Officer Keith Comrie and Robert McCarley, the city council's chief legislative analyst.
"We'd like to say that privatization ought to be applied to just about any municipal service," said Philip E. Fixler Jr., who worked on the study as a member of the Reason Foundation's Local Government Center. The Santa Monica-based foundation and the University of Miami's Law and Economics Center prepared the report.
Authors of the study contended that the city could save as much as $42 million annually by using private garbage collection and another $21 million by using private firms to resurface streets. They said another $5 million could be saved in street-sweeping costs and $1 million by using private security guards in city buildings.
In the county, the report noted, some of those same services have been contracted out. It said even more savings could be realized if the county would use more private firms in areas such as health care--which accounts for the largest single chunk of the county budget.
One suggestion, which Dixon said the county could consider, is turning over the operations of an entire county hospital to a private firm.
That proposal, along with the entire LATAX report calling for more widespread use of private companies, drew an immediate reaction from some public employee unions--all of it negative.
"I don't believe contracting out saves money," said Sharon Grimpe, general manager of Local 660 of the Service Employees International Union, which represents both city and county workers. "I don't think it's cost effective, and I don't think it's feasible. I'm a taxpayer, too, and I think they're just wasting our money."