IP-20-88 (October 1988)
Author: John Semmens
In the years since the end of world war II, spending at all levels of government has risen faster that the rates of inflation dramatic increases in public sector outlays is that government is attempting to do more than ever before. Whether government should be attempting so much is an important issues, but one beyond the scope of this paper.
Coping with the financial stress of trying to do more can be difficult. In Arizona, forecasts for the state budget project deficits of $ 70 to $140 million for fiscal 1989. Governments at all levels in the state have accumulated debts in excess of $11 billion. The need to deal with with these financial issues has encouraged many people to consider the option of privatization.
One of the attractions of the concept of privatization is its independence from the issue of wether there is or isn’t a real need for a particular public service. This allows for an alternative between an “all or nothing” choice for existing or proposed services. Whether one believes a government should or shouldn’t provides a specific service, it is possible for both advocates and opponents to agree that reducing the cost of the service is a good idea. The savings generated through cost reductions could be used either to provide more of the service or to lower the tax burden. Since the primary focus of privatization is reducing the cost of providing services, it is an idea that has appeal for both liberal and conservative agendas.