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Sunday, July 18, 2010

Christie's Privatization: Tomorrow's Corruption?

  
New Jersey Governor Chris Christie has received a privatization task force report which cites an absolute boondoggle -- the Hudson - Bergen Light Rail -- as an example of privatization's success.  (Don't believe me?  See numbered page 6 of the report -- which is the tenth page of the PDF file in the link provided above.) 
 
The Hudson - Bergen Light Rail is an absolute disaster by any rational criterion.  (Nice utopian concept; horrible execution.)  Anyone claiming it is a success should be questioned about an undisclosed financial agenda behind the claim -- in other words, were they paid to tout the light rail? -- or their credentials and abilities to be in any position of influence in government should be seriously scrutinized.  
 
The Light Rail is sparsely used, does not facilitate any commute into New York City and has cost quite a bit of money despite using existing railway lines, thus minimizing construction costs.  According to this Bergen Record article from May 16, 2010, the Hudson - Bergen Light Rail loses millions of dollars a year, generates revenue only from passenger fares which only cover about 30% of its operating costs, so taxpayers cover the balance, and despite those losses has ignored its lack of a fare collection system.  Its trolleys have no conductors on board, so payment is by some sort of honor system.  Oh, and the construction cost for the existing system has been cited in one 2008 Hudson Reporter report as $2.2 billion!
 
New Jersey cannot afford any more such "successes."  If Christie is going to use this light rail system as a model of success, the rest of the task force's proposals for privatization (which cover areas like automobile emissions, higher education, special education and so on) suggest the potential for multiple financial disasters -- while private companies receiving the contracts will enjoy monopoly status to protect their profit margins. 
 
Using objective criteria, the only way the Hudson - Bergen Light Rail has been a success is from the perspective of the contractors who profited off the contracts to build the Light Rail.  After all, that $2.2 billion of your money went into someone's pocket.  The "profit motive" you hear as being the driver behind privatization's efficiencies is really the "cost overruns" we routinely read about in connection with government contracts. 
 
The conversion of public funds for private benefit is the motive which has gotten many elected officials, appointed officials and contractors into legal trouble. We are troubled by the prospect that Christie's concept of privatization will be little more than the creation of "public-private partnership" monopolies which, if the light rail system is a model of success, will be financial disasters.  Should that come to pass, it will be interesting to see how the office of current U.S. Attorney Paul Fishman characterizes these arrangements. 
 
Eric Dixon is a New York lawyer who specializes in investigative matters.  He can be reached at edixon@NYBusinessCounsel.com and at 917-696-2442.
 
 
 

 

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