Yesterday, I testified at City Council and urged them to honor the will of the overwhelming majority of San Diegans who voted to allow the city to contract out some public services if the private sector can do them more efficiently and economically.
As of right now, that discussion is still going on at City Council, but I wanted to let you know my position on this important reform effort.
San Diego taxpayers wanted managed competition when they voted for it three years ago, and San Diego taxpayers want managed competition today. They want answers to our budget problems. They want to know if there are cheaper alternatives to the old methods of providing city services.
Yesterday at the City Council meeting, we saw further evidence that labor union leaders don’t want them to get those answers.
After that landslide election in 2006, the city began negotiating with labor union leaders over the comprehensive set of rules that would govern the program. Labor leaders immediately sought to neuter Proposition C, acting as though they were afraid they couldn’t win a managed competition on the merits.
For years, the city’s negotiators have tried to create a fair process under which we could get a better deal on city services and deliver savings to taxpayers. Yet negotiations dragged on -- burning up hundreds and hundreds of staff hours -- and union demands were so great that unfortunately, we were not able to reach agreement.
Yesterday, the City Council heard my last, best and final offer to the labor unions. It is a fair deal. It keeps faith with the voters who approved Proposition C. It protects the taxpayer by ensuring that reductions in costs of city services are not accomplished through reductions in the quality of city services.
The City Council also heard from labor leaders, who complained that they shouldn’t be asked to compete with the private sector unless the scales are tipped decisively in their favor.
The truth is, the scales are already tipped in the employee groups’ favor. Under the terms of managed competition, a private company cannot take over a city function unless it underbids city workforces by at least 10 percent. That means if the city spends $10 million to perform a public service, a private company has to perform the same work for less than $9 million in order to get the job.
But labor leaders aren’t happy with that. They want much more. They’re demanding that real costs in the city employee groups’ bids be ignored in order to tip the scales in the employee groups’ favor – and ensure minimal competition from the private sector.
One point on which we’ve been unable to reach agreement with the unions is how health care costs will be treated under the program. The unions insist that the cost of providing health care to employees should not be factored into bids.
Labor leaders know private companies generally provide health care for a lower cost than the city does. Their solution is to have taxpayers continue to pick up the tab for city employees’ health care – but then pretend it’s not a real cost in the bid process.
This is patently unfair and undermines the entire competitive bidding process.
We also are at odds with labor unions on how the program would account for administrative and overhead expenses, as well as how long to delay putting a function through the managed competition process after a city department undergoes pre-competition streamlining.
My proposal gives employee groups a full year to implement efficiencies before competing with the private sector, while labor leaders are pushing for a five-year delay between streamlining and managed competition. I think most San Diegans would agree that this sort of delay in reducing costs and saving taxpayer money is unacceptable.
Labor leaders also are insisting on a measure that would force private-sector contractors who win a contract to provide city services to hire the city employees displaced in the process. This measure would deter private-sector bids by forcing companies to hire redundant employees not of their own choosing.
Having lost at the ballot box, labor leaders are trying to force their will through the legislative process. The City Council must not aid them in this end-run around the voting public. The voters made it clear they support the efficiency that stems from fair competition, and the City Council should honor that mandate.