Labor-state bans privatization

Governor Carcieri has asked the state’s highest court to strike down a law passed last year that he says threatens to paralyze Rhode Island government by blocking his ability to use private companies to conduct state business. The governor’s office hand-delivered a letter to the state Supreme Court yesterday seeking an advisory opinion over whether the labor-backed “anti-privatization bill” — as it is called by critics — is constitutional. The court has tentatively scheduled a March 27 conference with Carcieri to review the request.

The question has serious implications for state workers and taxpayers.

The Republican governor included sweeping plans in his 2008-09 state budget to replace unionized janitors, food workers, prison counselors and dental workers with nonunion contractors who would presumably earn reduced salaries and benefits.

Altogether, the governor’s spending plan would replace 243 state workers with private employees, saving an estimated $3.1 million. Rhode Island is facing a deficit of at least $384 million in the coming year, the second-largest state deficit per capita in the nation, according to an analysis by the Center for Budget and Policy Priorities.

Carcieri has consistently argued that he needs every available tool to close the massive budget gap.

The law “makes it virtually impossible to privatize any governmental services or renew contracts of existing services being rendered by private vendors,” Carcieri wrote in a letter to Chief Justice Frank J. Williams. “I believe this enacted legislation impermissibly interferes with the official duties and function of the executive branch, which includes fundamentally the administration of appropriations and faithful execution of all laws requiring executive implementation from the legislative branch.”

The law requires state departments to conduct detailed cost comparisons before awarding contracts to private firms. It also requires that “the savings to the state is substantial,” but does not define “substantial” savings. And the law gives “affected parties” — program recipients, state employees or unions — 60 days to appeal any privatization decision to a Superior Court judge.

The Democrat-dominated General Assembly has defended the law as an essential safeguard for ensuring savings.

“If the governor could prove by going through this process that he could save money, I would be standing next to him to support that,” said Rep. Charlene Lima, D-Cranston, who had introduced the legislation for 13 consecutive years before it was approved close to midnight in the final days of the previous legislative session. “I just find it incredulous that the governor, in light of the great fiscal crisis we’re facing, would be asking the Supreme Court about the constitutionality of a bill that would provide transparency and ensure that there’s a taxpayers’ savings.”

Carcieri’s move yesterday drew criticism from labor unions, which had been in closed-door “discussions” with the governor’s office in recent months to negotiate concessions the governor needs to help balance a current-year $151-million deficit. One of the issues on the table was the privatization statute, according to George Nee, secretary-treasurer for the AFL-CIO.

“We’re a little disappointed that in light of the fact that we’ve been having discussions with the governor’s office and that was clearly one of the issues that was part of the discussions, that we feel that we got a little bit sandbagged,” Nee said. “We didn’t even get a heads up that that was in the works or being contemplated.”

The negotiations also included the largest state employees union, Council 94, American Federation of State, County & Municipal Employees.

“To be honest with you, I thought we were pretty close” to a resolution, said Council 94 executive director Dennis Grilli, declining to detail the concessions. “Now this throws a wrench in the process.”

The governor’s office said that Carcieri’s request was driven largely by timing. The question must be decided before the beginning of the next fiscal year, July 1.

“Given the Supreme Court’s schedule and the likelihood that the legislature will act on the budget in June, we could not wait any longer to request this advisory opinion,” the governor’s spokesman Jeff Neal said. “Ultimately, the Supreme Court justices — not the state employee unions — are the final arbiters of what is and what is not unconstitutional.”

It’s unclear how much the legal battle will cost state taxpayers.

House Majority Leader Gordon D. Fox said he believes the Assembly would prevail if the Supreme Court agrees to review the case.

“The General Assembly enacted appropriate fiscal oversight legislation prompted by concerns regarding some of the administration’s previous contracting practices,” he said. “I am confident that the Supreme Court will uphold the legislation.”

But there’s no guarantee the high court will agree to hear the case.

“The alternative to an advisory opinion is a lawsuit in Superior Court and appeal to this court,” Carcieri wrote to Williams, “which would not only needlessly delay resolution of this serious constitutional question, but would also bring about a disruption in vital state services that are currently being provided by private vendors.”

Since its June passage, the law has been tested just once.

The state Department of Transportation investigated privatizing its real estate and materials divisions last summer. After spending three months investigating the use of a private firm, the department concluded privatization in those cases “was not beneficial to the state,” according to an analysis by the Senate fiscal staff.


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