No. 8 Privatization Of Public Functions: Promises And Problems

Published February 18, 1986

During the 1970s the majority of American states adopted restrictions on the ability of states and local governments to spend. These restrictions usually took the form of ceilings on local property taxes or restrictions on amendment, passed by Congress in 1985, will similary restrict federal spending in hopes of achieving a balanced budget by 1991.

While voters are dictating lower, they are not reducing their demands for governments services. In fact, the political coalition between service providers, service recipients, and gorvernment appropriation committees appears stronger than ever. The problem facing state and local governments is compounded by the inability of most of these bodies to run deficits. The friction between competing demands for lower taxes and for expanded services has led many cities and states to turn to innovative methods of financing and providing traditional services. One of these methods has come to be called “privatization.” 

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