Privatization

Leonard Gilroy and Harris Kenny wrote a provocative article titled "Look Who's Embracing Privatization - Big City Democrats." (Look to your right for the link.) They document how Mayors -- ranging from Chicago's Rahm Emanuel to Los Angeles' Antonio Villaraigosa to Newark's Cory Booker -- have partnered with the private sector to provide high quality services at lower cost.

They write, "Mr. Emanuel is doing what sensible leaders do: focusing resources on the core functions of government and using competition to lower costs on the rest. When government agencies are forced to compete with the private sector, it saves taxpayers money and makes government more responsive to its customers. Performance-based contracts that set clear standards ensure that high-quality services are delivered by private firms that are held accountable."

Solving the Unfunded Pension Problem

An article by Barry Greenfield in EfficientGov (look to your right for a link to the article), lists six solutions to the unfunded pension obligations facing Newton, along with almost all cities, towns, and states in the U.S. They are:

1. Update actuarial tables so they accurately reflect our longer lifespans

2. Increase retirement ages

3. Cap base compensation levels that on which pensions are based

4. Place new employees in either 401k-style defined compensation plans or hybrid plans where risk is shared between the employer and the employee

5. Place caps on the amount employees can receive annually

6. Use cost-of-living adjustments cautiously or only when plans are funded by a minimun level

Operating vs. Capital Expenditures

John Kay is a leading British economist and a thoughtful commentator. Look under Interesting Articles to your right to read his March 7, 2012 article in the Financial Times. He notes that, "It is always easier to reduce public spending by deferring capital spending than by constraining current expenditure ... The process is self-defeating, because it increases rather than reduces the pressure on public expenditure in the future." He goes on to comment, "Within the capital budget, grand projects tend to squeeze out modest improvements."