Privatizing New York City

Unions push back on Bloomberg’s privatization efforts.

Your next parking job could be funding a private company’s coffers.

The Bloomberg administration is mulling a proposal to turn over 39,000 parking meters to a private operator—a service that netted the city $149 million in revenue last year, according to Department of Transportation figures.

Some City Hall officials suggested a private company could introduce more driver-friendly innovations such as paying meters with a smartphone or a mobile app that directs drivers to empty parking spaces. And the Bloomberg administration has questioned the “efficiency” of the public parking workforce.

“The Mayor has said many times that city government does not exist to employ as many workers as possible—it exists to serve New Yorkers effectively and efficiently, and we are working to ensure that our parking system does that,” Bloomberg spokeswoman Julie Wood told the Daily News last month.

But union leaders say both their workers and New York taxpayers would get nickel-and-dimed if the city privatizes a profitable service.

“It’s not just a union issue, it’s a city issue,” said DC 37 executive board member Michael DeMarco, who represents about 200 members of the city’s Traffic Employees Local. “This is a guaranteed revenue stream making millions of dollars for the city. Why would the city look to privatize something that has a history of working?”

Municipal workers help run the nuts and bolts of many public services that make the city run efficiently. But City Hall has awarded some of its public service contracts to private enterprise to supplement that labor—to the consternation of local unions.

Some of the work has gone smoothly.

The city’s public-hospital system has privatized its housekeeping services, and commercial garbage trucks have been collecting waste and recyclables from nonresidential buildings for much of the decade with little incident.

But tensions occur between unionized sanitation workers and private carting collectors.

Municipal garbage drivers complain that they wait for long periods of time when they go to private stations to drop off their waste.

“When you had municipal stations, you cleaned up, dropped your stuff off and went back out, and now they’re controlling when our trucks come in and drop off,” said Harry Nespoli, the president of the Uniformed Sanitationmen’s Association, Local 831. “We’re losing productivity because we have to wait. They’re ripping off the city.”

And this past winter the city contracted with private companies to plow tertiary streets after a record blizzard paralyzed New York in 2010—and the region experienced almost no snowfall.

Nespoli panned the deal, and said he told City Hall that the department was undermanned during the storm. He sees an administration that is cutting back or outsourcing essential services.

“Every city worker turns around and knows this is what they’re going to do and they have to perform, and if they don’t perform they’re gone,” he said. “The city always had the right if a certain storm jeopardized citizens to call in the privates anyway. But right now it’s a rip-off to the citizens of New York City.”

But labor experts question whether the city should be in the business of managing garbage collection when 40 percent of American cities privatized that service and the average total cost of employing a sanitation worker rose from $79,000 to $140,000 per year over the past decade.

“Public-sector healthcare and pension plans are far more expensive than the private sector,” said Manhattan Institute senior fellow Steve Malanga. “And because it’s a civil service, you can’t really pay employees for incentives. You can’t have someone running a garage whose revenues increase over a year, and pay them a bonus.”

But there have been some notable privatization debacles.

Few noticed the city’s most controversial outsourcing effort until the Department of Investigation and later the U.S. Attorney’s Office began to probe CityTime, a project contracted primarily to the Scientific Applications International Corporation (SAIC).

CityTime, an electronic system designed to track precisely the hours worked by city employees, was initially projected to cost $63 million when the contract was awarded during the Giuliani administration, but over the years the cost ballooned to over $700 million—much of which was “tainted” by fraud, according to federal prosecutors.

In March 2012, SAIC settled with the city for over half a billion dollars.

City Comptroller John Liu, a critic of the mayor’s parking-meter plan and of CityTime, said Mayor Bloomberg has had privatization on his mind for “quite some time” and that the consequences have been the waste of “substantial amounts of money.”

He described the CityTime project as “being one of the biggest examples, where hundreds of millions of dollars were wasted, but in this case fortunately recovered by the U.S. Attorney.”

If the administration pursues the privatization of parking, it is likely to have a fight with municipal unions on its hands.

On July 30, union workers led a rally on the steps of City Hall demanding the city back off from its parking-meter plan. And Council members, including Letitia James, worry that the city is rushing into a proposal with few benefits to their constituents.

“The question is whether or not the administration is analyzing whether this is good for taxpayers,” she said. “I don’t think there’s been a thoughtful analysis of the benefits at all.”