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What's driving privatization of public transit?

Michael Short/California Watch In Fairfield, officials have outsourced the city's public bus service to MV Transportation. 

As more cities turn to private companies to run public transit systems, our recent investigation shows that privatization may not be the silver bullet that cash-strapped municipalities were hoping for.

In Fairfield, where the city’s suburban landscape makes it difficult to provide reliable and comprehensive bus service, local officials are finding it hard to hold its contractor, MV Transportation, accountable. Transit reporter Zusha Elinson found that “over a two-year period beginning in 2008, the company was fined 295 times for a total of $164,000” for late arrival times and drivers speeding, being out of uniform and using cellphones while driving.

Behind the fines, however, is a much larger ideological debate: Is privatization of certain industries like transit, which some traditionally consider to be public domain, a good thing?

We asked Elinson to break it down for us.

Q: Why are more cities turning to private companies to run their public transit systems?

A: Privatization started under (President Ronald) Reagan, who championed public-private partnerships in favor of smaller government. But the trend really accelerated during the (recent) recession because a lot of municipalities and transit agencies don’t have enough money to maintain these services. The one thing that outsourcing your public transit does is save money.

Across the country, very large cities are going this route: Austin recently outsourced all their bus services; New Orleans handed over its entire public transportation to a private company, including its management; Nassau County in Long Island did the same.

A lot of times these deals will be sold as saving the taxpayers this many millions of dollars. But looking at a couple of different situations in San Diego and New Orleans, the money being saved has been quite a bit less than advertised. That’s not to say they haven’t been saving money. Often they’ll tout savings that are quite far above than what is being saved.

Q: Who benefits? Who loses?

A: One of the biggest costs for public transit is labor. When they contract to private companies, they can winnow away labor costs by not offering pensions and cutting health benefits. So naturally, bus driver unions don’t like these arrangements because it means their wages and benefits will be cut.

For example, a few years ago in northern San Diego County when the North County Transit District brought in a private company, the starting wage for a bus driver went from $14 to $10.50 an hour. One general concern that comes with paying drivers less is safety – maybe you have more inexperienced drivers. This isn’t the case for every company, but it’s a concern.

Q: What does the case in Fairfield teach us?

A: Supposedly the benefit of doing this is that you have a contract with the company to make them do what you want. But the story in Fairfield shows that it’s not so. For example, in Fairfield, MV Transportation officials actually had quite a bit of political sway to squash efforts to keep them in line. So it was difficult, at least for (former) Transit Manager George Fink, to hold them accountable.

(Our investigation found that MV Transportation made a $10,000 campaign donation to then-City Councilman Chuck Timm in 2007. In 2009, Jon Monson, then the company’s board chairman, made $10,000 campaign donations to City Councilman John Mraz and City Councilwoman Catherine Moy.)

People can take lessons from this situation: You need to really take a look at which company you’re hiring and make sure they comply with the contract. Can people holding them accountable really do that? While many transit agencies are run very inefficiently and can be improved, you don’t have to worry about influencing politicians or people taking measures just for profit margins when the system is run by public agencies.

Q: Can this happen in big cities like San Francisco?

A: A leader of the Muni drivers union in San Francisco, a very strong union, laughed when I asked him that. He said no way. So, likely it wouldn’t come to a big city with a strong union presence, but it could be the fact that other large cities continue to do this. Maybe not SF, but some other big cities.

In the Bay Area, as we mention in our article, they’re considering contracting out some routes in southern Alameda County, where AC Transit has provided the bus service for many, many years. That’ll be a really big fight if that happens because the bus drivers union is quite strong in the East Bay. But I think it just shows the trend that even in the Bay Area, where the unions are really strong, this is even being considered.

Q: Does the public even know who runs its public transit system? Do riders feel the impact?

A: Transit officials tend to say that people don’t really know who’s running their bus lines, but I don’t think that’s actually true. In talking with people in Long Island, they were really wary of this situation in Nassau County. In fact, in Nassau County, where (nearly) everyone is a commuter to the city, their transit was outsourced to a big French company. For the first time ever, they formed the Long Island Bus Riders Union. It showed that bus riders were really concerned about what might happen. There’s always two sides to the story: The company says it saved a lot of money and provided services more efficiently. But at the same time, it cut service, which people are upset about.

This interview has been edited and condensed.

Correction: A previous version of this story misstated an effect of Nassau County outsourcing its transit. Service was cut.

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