The state fiscal crisis combined with the growing revolt against new taxes is forcing policymakers to search for ways to substantially cut the costs of delivering state services. Privatization allows policymakers to avoid tax increases without eliminating essential services. Privatization is an increasingly important component of programs to restructure state government, as it serves policymakers' short-term goals of cutting state deficits, while also furthering the long term goals of rightsizing government and incorporating competitive incentives into state services.
Privatization is already a common practice in state governments.
Nevertheless, most privatization to date in state government has been sporadic, thus limiting the potential gains from privatization. However, this is changing. To realize the full potential of privatization, states are beginning to explore the possibilities of applying various privatization techniques across the full range of state services, assets, infrastructure, and real estate. Over 20 percent of the states responding to the 1992 Apogee survey reported that they were preparing statewide or agency-wide privatization strategies, compared to none in 1989. Privatization opportunities range from services such as road maintenance and child-support enforcement, to sales or leases of state assets such as turnpikes and parks.