Unions, Malloy bump heads over public-private partnerships

Gov. Dannel P. Malloy’s up-and-down relationship with labor unions dipped again Thursday when his administration introduced a proposal that seemed to open the door to privatizing some state functions as part of next week’s special legislative session on economic development.

Union leaders and members representing thousands of public-sector workers balked at a proposal to give government greater flexibility to coordinate the design, construction and inspection services for capital projects through the private sector.

Full details of the proposal — dubbed P-3 or Public-Private-Partnership — were not available Thursday.

Specific bills to be considered next week still were under development, but the legislature’s Commerce and Labor & Public Employees committees conducted a public hearing on concepts outlined by administration officials, mainly through a PowerPoint presentation.

Malloy’s budget chief, Office of Policy and Management Secretary Benjamin Barnes, said the P-3 approach would complement the administration’s ongoing efforts to expand state bonding for capital construction projects, boosting a hard-hit industry.

“I know privatization means many things in many contexts,” Barnes told lawmakers. “This will allow us to do more projects, to do them more quickly, and to take some of the risks off the state.”

State agencies overseeing capital projects typically coordinate design, construction and inspection services separately, often relying on a variety of companies to perform those roles. They also, depending on the project, may employ state engineers, other designers and inspectors.

Under the P-3 concept, the administration would have more flexibility to deal with one private entity, such as a construction company that would either provide its own design and inspection services, or coordinate with other businesses to provide them.

But Brian Anderson, legislative advocate for Council 4 of the American Federation of State County and Municipal Employees, said that unless government oversight of all aspects of a public project is carefully maintained, they typically ended in botched work and cost-overruns.

“We urge you not to move forward with such an untested and controversial program during the special session,” Anderson told lawmakers. “Public-private partnerships reduce transparency, accountability and oversight of public services.

“Much of the experience (with P-3) has been disastrous” in the U.S., said Paul Filson, director of Service Employees International Union’s Connecticut council. As government oversight shrinks, decisions driven by profit margin, and not a desire to ensure quality work and fair wages, become common, he said..

The State Employees Bargaining Agent Coalition, which negotiates benefits on behalf of about 45,000 unionized state workers, issued a statement praising Malloy and the legislature for holding a jobs growth special session, but it condemned the P-3 concept.

“Using this special session to rush through bad public policy ideas like ‘design-build’ construction and ‘public-private partnerships’ would be a tragic error,” SEBAC spokesman Larry Dorman said. “If implemented, these concepts could reduce oversight and accountability, open the door to corruption and back-room dealing, and ultimately both damage public projects and cost jobs.”

Outside the public hearing, some labor officials questioned how the proposal was connected to job growth.

Most of the proposals for the jobs special session involved bonding for various incentives for companies to add jobs, a new tax break aimed at small businesses, and a plan to streamline state regulations. Barnes had raised the concept with lawmakers while noting that the administration wants to increase state investments in transportation infrastructure by $50 million during the session.

“The administration should use this special session as it was intended – to address our economic and infrastructure crisis with proven answers that we know will create a stronger economy, safer infrastructure, and more jobs for the middle class,” Dorman added. “They should leave controversial, divisive, and uncertain social experimentation to be reviewed through the General Assembly’s public hearing and committee processes, so flaws in those ideas can be revealed and dealt with appropriately.”

Barnes said public-private parternships are ‘best suited” to capital projects whose financing is being repaid with revenues from that project. For example, if Connecticut wished to borrow funds to construct a new parking garage, it could hire a company or companies to design, construct and operate the garage — all under one contract. The company would then provide payments to cover the debt service with profits from the garage receipts.

The concept may draw some opposition from labor, Barnes told legislators, “but in the future this may be one of the principal ways infrastructure is financed in this country.”

Barnes insisted in an interview afterward that the proposal is not a roundabout way to dramatically expand the privatization of state services. “We’re not looking to do an end around,” he said, adding the administration also remains strongly committed to prevailing wage statutes, clean contracting laws and other provisions that ensure public capital projects create construction jobs with fair wages.

But Anderson noted that the administration had disappointed some in labor earlier this year when Malloy and the legislature budgeted just $175,000 for the State Contracting Standards Board — a government contracting watchdog group. That total was less than one-fifth of the amount board members had said they needed to be effective.

And as a gubernatorial candidate last fall, Malloy had criticized then-Gov. M. Jodi Rell for reducing the board’s annual budget from $950,000 to $10,001 — an amount that was too little to support professional staff and effectively served only as a fiscal placeholder.

Malloy’s relationship with state employee unions was particularly challenged this year when he proposed $2 billion in concessions and other labor savings over two years. After an initial vote on a revised, $1.6 billion biennial concession package failed in mid-June, a second vote concluded in Aug. 18 ended with the package being ratified.