By Gregory Korte
The Cincinnati Enquirer

A year ago, in an effort to rein in an $11 million budget deficit, Cincinnati City Council approved a controversial plan to privatize hundreds of city jobs.

Now, a year later, the city budget deficit for 2003 approaches $35 million, but the "managed competition" process is still just beginning.

Republicans and some Democrats on council say they are frustrated by the slow pace of change. But some union leaders say the process is moving too fast.

Under last year's budget resolution, city council voted to open four services to private bids: street cleaning, management of the Albert B. Sabin Cincinnati Convention Center, fueling of city vehicles, and computer and phone maintenance.

Of those, only street sweeping is near ready for private bids, with requests for proposals to be issued as soon as council approves the framework for the process. That process allows city workers to put together their own proposal and keep the work in-house, if they can do it better and cheaper than an outside contractor.

Without those bids in hand, City Manager Valerie Lemmie cannot factor the potential cost savings into the budget projections that city council will use when considering the budget this month.

A coalition of Republicans and moderate Democrats - which includes John Cranley, Pat DeWine, Chris Monzel, David Pepper and James Tarbell - says managed competition will help drive down costs, saving as much as 25 percent. Projected savings could hit around $2.4 million, council members say.

"It's unbelievable that it's taken us a year to do this," said Mr. DeWine, a Republican and chief proponent of managed competition. "At this rate, we won't see any cost savings, because they're not doing anything. They're trying to meeting this thing to death."

Even Democrat Alicia Reece, who fears that managed competition could result in low-wage jobs providing lower-quality services, said the city should be moving more quickly.

"This council passed managed competition. I did not support that, but it did pass," she said. "I'm not trying to slow it down. I'm just as mad as Mr. DeWine."

City officials said it's taken this long to ensure a process fair to both taxpayers and city workers.

The city's unions say it's fair to neither.

"We believe the process set up by the city manager is skewed toward the private sector from the beginning," said Bob Turner, regional director of the American Federation of State, County and Municipal Employees, Ohio Council 8. "It assumes the private sector can do it better."

AFSCME represents about 2,500 city workers who sweep streets, fix potholes and pick up garbage. They complain that:

Private contractors won't have to pay comparable wages to their workers. In fact, under a "living wage" ordinance passed by City Council last week, city contractors can pay as little as $8.70 an hour for jobs with benefits - replacing city workers making $15 or $20 an hour.

City employees are required by law to live within Hamilton County. There are no restrictions on where outside contractors can live. Also, the city is prohibited from hiring felons, while contractors have no such requirement.

The union wants a minimum cost-savings threshold of 10 percent or $100,000, to account for transition costs and "the risk and uncertainty associated with contracting out." Because outsourced services are governed by a contract, emergency situations and other special requests must be re-negotiated - meaning that private companies often aren't as flexible, Mr. Turner said.

But beyond those political issues, many of the union's complaints are about the process.

For example, teams of unionized city employees will be given the chance to cut costs on their own before services are put out for bid. But those cost-saving ideas could work against them, as private bidders use them in their own proposals. The union says that would "start the process of driving out costs and then hand over this newly hatched golden egg to the private sector."

Mr. DeWine, however, sees the administration proposal as attempting to "micromanage the business of people who bid on contracts."

The process contains some necessary provisions to allow displaced city workers to get jobs in the private sector, he said. But too much emphasis has been placed on attaching strings to that process.

"It was something written, in my view, to try to keep city employees and bureaucrats happy, rather than improve the delivery of basic services," he said.

In the middle of this political tug-of war is Cincinnati Water Works Director David Rager, who was appointed by the city manager to head the managed competition process.

His half-joking response to criticism from both sides of the managed competition debate: "If everyone's unhappy, I guess we must be doing something right."

Cincinnati hired a consultant from Indianapolis to draw a blueprint for future privatization. From the Law Department to janitorial services, almost every city service will be evaluated and possibly put out for bid.

City employees may win those contracts, Mr. Rager said. But even if those services stay in-house, forcing city agencies to examine what they do and to justify their costs will be a healthy exercise, he said.

"Some things will be contracted out. Some services will never be contracted out, and the classic examples there are things like police and fire. Nobody in the private sector wants to take on emergency dispatching because of the liability. And some services, we may decide, will no longer be provided in Cincinnati."

Ultimately, the decisions about which services remain in-house are up to City Council, he said.

Mayor Charlie Luken said that's exactly where the debate belongs.

"At some point, you just have to decide whether you're going to do it or you're not going to do it," Mr. Luken said. "Otherwise, we're going to be talking about this process for longer than my term, at least."

E-mail gkorte@enquirer.com