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Of the municipalities D.C. Mayor Anthony Williams visited on his four-city pre-inaugural educational tour last month, Indianapolis seemed to make the strongest impression. Indeed, after a mere 12 hours in the Circle City, Williams emerged as the latest evangelist for Indy Mayor Stephen Goldsmith’s “managed competition” privatization program of putting virtually all city contracts up for bid between the public workers and private contractors. Could the Hoosier Republican’s scheme work in the District, the Washington Post asked? “Absolutely, positively, unequivocally,” Williams responded.
To judge from the Post’s article, it wasn’t hard to understand Williams’ zeal. Goldsmith, the paper reported, told Williams how managed competition has resulted in hundreds of millions in savings for the city. Williams, however, might want to wait until he’s in possession of all the facts about Indianapolis before he applies the Goldsmith template to D.C. Unfortunately, it’s not as easy as just looking them up: The city hasn’t undergone a comprehensive financial or performance audit by the Indiana State Board of Accounts in the entire seven years Goldsmith has been in office.
“Frankly, it’s hard to tell just how successful his privatization programs have been, because, to my knowledge, there’s no independent verification for them,” says Bill Hudnut, Goldsmith’s Republican predecessor as Indianapolis’ mayor and now a fellow here in Washington at the Urban Land Institute. “I don’t know whether there are any reliable figures, and I don’t think anyone else knows, either.”
Indianapolis has indeed been audited during the Goldsmith regime; it’s just that who did it and what was produced make some folks uncertain. In the rest of Indiana, the state automatically auditsat the cost of $30 a dayevery municipality with a population of more than 5,000. In privatized Indianapolis, however, the auditing has been outsourced to the firm of Coopers & Lybrand (now Pricewaterhouse Coopers), which has received nearly $1.2 million of Indianapolis taxpayer dollars since 1993.
According to city councilmember Jeff Golc and a host of other critics, the final products are inferior. Unlike the State Board of Accounts’ performance reviews of each city department, the private firm’s audits are broad overviews. “There aren’t any specifics,” Golc says. “In essence, they say the city’s solvent, but beyond that, no details, just generalities like ‘stable’ or ‘not stable.’ They aren’t performance audits that actually reveal if money was spent on what it was supposed to be spent for, or detailing how it was spent. There should be accountability, but the fact is, privatization has axed all accountability.”
In June of last year, Golc sent the mayor’s office a list of more than 60 specific questionswith requests for copies of contracts, purchase orders, letters of intent, and other documentsregarding the privatization of Indianapolis’ parks division. It wasn’t until November that he got two pages of vague responsesand none of the materials he had requested.
Of course, one could chalk this situation up to partisan politicsGolc is a Democratbut according to several Indianapolis Republicans, not only do some Republicans on the city council resent Goldsmith’s lack of forthrightness and his usurping the council’s power, but they, too, have no real idea what savings the city has realized; they are as steamed as Golc. “Republicans here take the Reagan Rule very seriously,” says one, referring to the ex-president’s admonition not to speak ill of other Republicans. “But behind closed doors, a lot of people have been expressing concerns.”
Managed-competition advocates say the plan means a bright new age of efficient government. But some examples of Indianapolis’ compromised accountability that have been pointed out by a handful of investigative reporters and activists evoke D.C.’s crony-ridden bad old days.
Take, for example, the Coopers & Lybrand contract with the city. Last November, NUVO Newsweekly, Indy’s alternative weekly, revealed that between 1991 and 1997, the accounting firm’s Indiana political action committee and its executives kicked in over $30,000 in campaign contributions to Goldsmithabout $25,000 more than any other Hoosier Republican got in the same time period. “If that isn’t a vested interest, I don’t know what is,” says Golc.
After NUVO’s story broke, the paper was deluged with calls asking how citizens could force the State Board of Accounts to undertake an audit. Among the requests, according to news editor Brian Howey, was a desire to determine once and for all if aspects of “managed competition” are little more than a quid pro quo between businesses seeking easy money and a politician seeking campaign contributions.
There’s no shortage of other examples in Indianapolis’ privatization record that are reminiscent of the sort of D.C. wheeling and dealing Williams has vowed to stopand suggest that the city’s examples should be taken with a shaker or two of salt. In 1996, for instance, NUVO discovered that an old Goldsmith friend and real estate developerwho just happened to be a campaign contributorhad secretly met with the mayor and told him he thought a slice of public greenway on the White River would be perfect for a housing development. Goldsmith ceded the land to the developer and dipped into the city’s coffers to underwrite infrastructure building for the project. When the city board that oversaw greenways tried to counter the move, Goldsmith simply dissolved the board.
Not long afterward, NUVO reported that another developer who also just happened to be a campaign contributor had informed the mayor that he coveted a swath of land held by the Indianapolis Airports Authority. The mayor’s response: to swap a piece of city-owned parkland for the airport land, and give the land to the developer.
And when Goldsmith decided to privatize the city golf courses and contract their management out to the golf pros, the pros were, as a report from Indianapolis’ Alliance for Democracy noted, “ordered to proceed expeditiously with repairs and remodeling and send the bills to the city.” The work was done remarkably fast. The Indianapolis News later revealed that the proswho had kicked in a total of $29,000 for Goldsmith’s campaignand the city had broken the law by ignoring statutory requirements for competitive bidding and building inspection permits. Goldsmith’s take? The pros weren’t “guilty of anything more serious than the sin of enthusiasm.”
In fairness, says Golc, Goldsmith has had some excellent, innovative ideas, and some of his initiatives have had demonstrable success, like the privatization of the city’s airport and water plant. But diminished accountability means that the city’s other purported successes could have more basis in hype than in reality.
D.C., of course, has a bad track record in terms of falling for just that kind of hype.
“When you privatize government, you expand the number of private beneficiaries of government,” says Harrison Ullman, a veteran journalist and former bipartisan political consultant, who now edits NUVO. “And if you do that, you have to have transparency.” That particular lesson somehow hasn’t made the headlines in the wake of Williams’ Indianapolis visit.CP