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May 18, 2012

Governor hopefuls differ on issue of privatization

Gov. Daniels has been aggressive in the practice

INDIANAPOLIS — Indiana Democratic gubernatorial hopeful John Gregg said he opposes privatizing state government tasks, while the Republican candidate, Mike Pence, is more open to it, their campaigns said Thursday.

“Mike Pence believes partnering with service providers can produce great results for taxpayers. All potential partnerships should be evaluated on a case-by-case basis, but we should keep an open mind,” said Pence spokeswoman Christy Denault.

Meanwhile, Gregg, a former Indiana House speaker who works for a law firm that benefits from state agencies farming out some of their legal and lobbying work, “generally, he does not support privatization,” said his spokeswoman, Megan Jacobs.

The Libertarian candidate for governor, former “Survivor” star Rupert Boneham, favors privatization in some instances but wants increased transparency, said his campaign manager, Evan McMahon.

“Rupert’s big concern is how these deals are brokered. Often they’re done in private, and the taxpayers only find out about it after the fact,” McMahon said.

“What he would like to see is a public vetting process where all of these bids are put up online with plenty of time for the average Hoosier to research them, understand it and give their public input on it. After that, any contracted bid that is accepted should list why it was accepted and why other bids were rejected.”

Their stances come the day after the Hoosier Lottery announced it wants to hear ideas from private companies on how to maximize its profits — a move officials with the lottery said is not a step toward full privatization, as Gov. Mitch Daniels had once proposed.

During Daniels’ seven-plus years in office, the state has entered several high-profile deals to hand state functions over to private businesses, with mixed results.

In 2006, Daniels signed a $3.85 billion, 75-year lease of a northern Indiana toll road in the “Major Moves” deal. That netted the Indiana Department of Transportation the money it needed to start the Interstate 69 extension from Indianapolis to Evansville.

His administration also signed a 10-year, $1.37 billion contract with a team of vendors led by IBM Corp. to switch Indiana’s welfare delivery process from its old, paper-based methods to a modernized system with a call center and online document processing.

That effort ultimately produced hiccups. Daniels fired IBM in 2009 and switched the Indiana Family and Social Services Administration to a “hybrid” method that kept all the other contractors but also elevated the state’s role in leading the changes.

Many state functions already are contracted to outside businesses. For example, the state treasurer’s office and Indiana pension funds hire money managers to invest their cash.

Agencies hire outside attorneys to represent them, such as the Indianapolis firm Barnes and Thornburg in the IBM deal and dueling lawsuits that followed. They also hire technological firms to handle computer and software issues.

Jacobs, Gregg’s spokeswoman, said because the Indianapolis law firm that employs Gregg, Bingham Greenebaum Doll was hired from the outside to do work for the Hoosier Lottery, he cannot comment on that move. “Based on John’s law firm’s representation of governmental agencies mentioned in yesterday’s Hoosier Lottery announcement, he cannot speak to that particular issue,” she said.

“But, generally, he does not support privatization. In the instances of the toll road and the FSSA/IBM deals he has not and does not support those privatizations.”

McMahon said Boneham opposes privatization when it relates to social services or state prisons, but supported the “Major Moves” deal.

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