Daniels: House Democrats’ privatization hurts taxpayers, favors big government

INDIANAPOLIS – Gov. Mitch Daniels criticized limits on the outsourcing of state services that House Democrats have written into a proposed state budget, saying Friday the restrictions would hurt taxpayers and favor big government.\nHe also said the limits might be bargaining chips that could be removed during budget negotiations later in the legislative session.\nThe proposed budget that House Democrats formally presented Friday would require legislative approval for any funding after mid-2008 to outsource the processing of food stamps, Medicaid and other benefits to an IBM-led partnership. A contract signed by Daniels just days before the General Assembly convened in January calls for the state to pay the IBM team $1.16 billion over 10 years.\nThe budget bill also would bar Daniels’ proposed leasing of the Hoosier Lottery, create a new legislative agency to review all state privatization contracts, and would require lawmakers’ approval before any future contracts with private consultants to examine the feasibility of outsourcing state work.\n“It’s a very anti-taxpayer, pro-big government message. There’s no other way to read it, and it’s not a good idea,” Daniels told reporters.\nThe governor said contracts to outsource services at the\n Family and Social Services Administration will save Indiana taxpayers $1 billion over the next 10 years. He said legislative panels already have the means to review the practices of state agencies by calling department heads to testify.\n“Throwing up roadblocks to that sort of thing when ample tools already exist through the legislative standing committees is bad practice. I’m unaware of any state where there are hurdles like that to serving the taxpayer better and stretching taxpayer dollars,” Daniels said.\nHowever, Daniels said the budget bill’s provisions might be Democrats’ bargaining chips for negotiations later in the budget process.\nBut House Speaker Patrick Bauer of South Bend made it clear Friday that he and his fellow House Democrats want to rein in Daniels’ privatization initiatives. He noted that a separate House bill would require legislative approval for all state contracts that run at least two years and cost more than $100 million.\n“We are trying to stop privatization before he ignores the budgetary process and the law of the state of Indiana,” Bauer said.\nThe budget bill’s provision covering future funding for welfare outsourcing could slam the brakes on the IBM contract just as it’s completing its statewide rollout and after the Family and Social Services Administration had shed about 1,500 county-level employees currently doing the work.\nThe contract calls for those employees to change jobs overnight on March 19 and join IBM partner Affiliated Computer Services Inc. The management of benefits would begin its transition to the private vendors next August in 10 counties surrounding Marion County, then continue through other regions of the state through mid-2008.\nFSSA spokesman Dennis Rosebrough said the agency had no comment Friday on the House Democrats’ budget proposal.\n–Associated Press Political Writer Mike Smith in Indianapolis contributed to this report.