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Annual Privatization Report 2008 Edited by Leonard C Annual Privatization Report 2008 Edited by Leonard C. Gilroy Reason Foundation Reason Foundation Reason Foundation’s mission is to advance a free society by developing, apply- ing and promoting libertarian principles, including individual liberty, free markets and the rule of law. We use journalism and public policy research to influence the frameworks and actions of policymakers, journalists and opinion leaders. Reason Foundation’s nonpartisan public policy research promotes choice, competition and a dynamic market economy as the foundation for human dignity and prog- ress. Reason produces rigorous, peer-reviewed research and directly engages the policy pro- cess, seeking strategies that emphasize cooperation, flexibility, local knowledge and results. Through practical and innovative approaches to complex problems, Reason seeks to change the way people think about issues and promote policies that allow and encourage individuals and voluntary institutions to flourish. Reason Foundation is a tax-exempt research and education organization as defined under IRS code 501(c)(3). Reason Foundation is supported by voluntary contributions from individuals, foundations and corporations. The views expressed in these essays are those of the individual author, not necessarily those of Reason Foundation or its trustees. Copyright © 2008 Reason Foundation. All rights reserved. Authors Editor • Leonard C. Gilroy Principal Authors • Leonard C. Gilroy • Amanda Kathryn Hydro • Robert W. Poole, Jr. • Anthony Randazzo • Skaidra Smith-Heisters • Lisa Snell • Varna Sri Raman • Samuel R. Staley • Adam B. Summers • Steven Titch Contributing Authors • William Korchinski is a chemical engineer who has spent his career working worldwide in the oil refining and chemical industries. • Ken Orski is a transportation policy consultant and publisher of Innovation Briefs. • David Stokes is a policy analyst at the Saint Louis-based Show-Me Institute. • Jonathan Williams is the Director of the Tax and Fiscal Policy Task Force for the American Legislative Exchange Council. Annual Privatization Report 2008 Letter from the Editor By Leonard C. Gilroy elcome to Reason Foundation’s Annual Privatization Report 2008. Now in its 22nd Wyear of publication, APR is the world’s longest running and most comprehensive report on privatization news, developments and trends. APR 2008 details the latest on privatization and government reform initiatives at all levels of government. The “Federal Update” section presents an update on the Performance Assess- ment Rating Tool (PART)—used by the Bush administration to rate programs and determine budget priorities—as well as the latest on the president’s competitive sourcing initiative that, despite a slowdown in use, continues to save taxpayers billions of dollars. We also review the recently passed farm bill, which perpetuates a dysfunctional subsidy and earmark program desperately in need of reform. The “State and Local Update” section offers a comprehensive update on the latest privatia- tion action across state and local government, including articles on the revamping of Utah’s state privatization board, Florida’s controversial outsourcing initiatives, Indiana’s government reform efforts, and the latest on Chicago’s infrastructure privatization innovations, managed competition in San Diego and Georgia’s contract cities movement. This year’s APR also provides a comprehensive overview of domestic and international developments in air and surface transportation, including a wide-ranging overview on infra- structure finance, a discussion on public-private partnerships in the context of global economic competitiveness and a review of the latest in air traffic control reform and aviation security. APR’s “Emerging Issues” section examines three topics that continue to attract a great deal of attention in policy circles. First, we review the latest federal and state efforts to make government more transparent by allowing taxpayers access to government spending informa- tion online. Second, we provide an overview of the latest state lottery privatization proposals. Lastly, we review an emerging area of interest in infrastructure public-private partnerships: our nation’s seaports. APR’s “Education” section offers a comprehensive update on school choice, with features on the bipartisan push for more choice, growth in special needs scholarships, charter school achievement and the growth in school empowerment and weighted student formula programs over the last year. APR 2008 also covers the ever-changing world of telecommunications policy, with updates on network neutrality, video franchise reform and Internet taxation. In addition, we include an article detailing how cities, once enthusiastic about developing municipal broadband systems, have started to grow wary of funding and owning their own broadband systems after observ- ing the pattern of revenue shortfalls and cost overruns in existing systems. This APR also reviews the latest developments in the private corrections and water indus- tries, including an article on an emerging threat to private water utilities in Scottsdale, Arizona and several other communities nationwide—de-privatization through the use (or threat) of eminent domain. Lastly, we offer an update on land use and environmental issues, with feature stories on Houston as a model for local land use regulation and the impact of Florida’s Growth Man- agement Act on housing affordability in the state. We also provide the latest on the property rights front, reviewing recent developments in eminent domain reform and regulatory takings reform. This section also features articles on the false promise of hydrogen cars and the envi- ronmental costs of hemp prohibition. Your comments on the Annual Privatization Report 2008 are important to us. Please feel free to contact us with questions, suggestions or for more information. For more privatiza- tion news, check out Privatization Watch (www.reason.org/pw.shtml), now in its 32nd year of publication. For the most up-to-date information on the rapidly changing privatization world, please visit Reason’s Privatization Center (www.reason.org/privatization) and our weblog, Out of Control (www.reason.org/outofcontrol). Leonard C. Gilroy, Editor Annual Privatization Report 2008 Annual Privatization Report Contents Federal Update ........................................................................................................ 1 A. Program Assessment Rating Tool (PART) Update ..............................................................1 B. Competitive Sourcing Falls Short of Goals; OMB Blames Congress for Limiting Initiative ...4 C. 2008 Farm Bill Expands Subsidies, Earmarks ................................................................. 6 D. Senate to Privatize Its Ailing Restaurants ....................................................................... 8 State and Local Update ............................................................................................9 A. State Privatization Update ..............................................................................................9 B. Local Privatization Update ............................................................................................23 C. State Budget Outlook ...................................................................................................27 D. Rich States/Poor States: ALEC-Laffer State Economic Competitiveness Index ..................29 E. Occupational Licensing Reform in Arizona .....................................................................30 F. Competitive Bidding for Pharmacy Services in St. Louis County, MO ................................ 31 Surface Transportation ..........................................................................................33 A. Overview: Infrastructure Finance ..................................................................................33 B. National Commission Reports ......................................................................................39 C. New PPP Toll Roads & Toll Lanes ...................................................................................40 D. Leasing Existing Toll Roads ...........................................................................................46 E. Federal Concerns Over PPP Toll Roads ...........................................................................47 F. International Toll Road Developments ........................................................................... 48 G. PPPs Give Leg Up to Global Competitors ....................................................................... 51 Air Transportation ..................................................................................................53 A. Airport Privatization .....................................................................................................53 B. U.S. Airport Security ....................................................................................................58 C. Air Traffic Control .........................................................................................................59 Education ..............................................................................................................62 A. School Choice Increases through Bipartisan Efforts in 2008 ..........................................62 B. New 2008 School Choice Programs ..............................................................................63 C. Existing School Choice Programs Expand in 2008
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