Fiscal pressures, voter discontent, and the possibility of adding properties to local tax rolls make it unlikely that the recent interest in privatization will subside anytime soon, according to an analysis offered in the Sept. 21 edition of Standard & Poor's Corp.'s CreditWeek Municipal.
Standard & Poor's noted in the article that though state and local governments are "scraping through the current recession," they face a money squeeze for the foreseeable future. At the same time, the article says, voters have become increasingly disenchanted with the way government services are provided.
One way municipalities can get at both problems is to privatize some operations. By selling to or contracting with private sector parties, state and local governments can receive cash and perhaps increase efficiency in service delivery. And by selling a municipal asset, like an airport or sewer facility, a local government can start taxing the property.
Despite widespread interest in such practices, however, "privatization has yet to be widely practiced in the U.S.," Standard & Poor's said. The rating agency explained that while privatization has mushroomed globally, services like banking and telephone utilities that have been privatized in other nations are already privately run in the United States.