Wowkanech: Christie Wins, Taxpayers Lose on Lottery Privatization Deal

The op-ed below was published on

Gov. Chris Christie often talks about the need for transparency in government. He frequently points to his own administration as an example of how to carry out the functions of government in a forthcoming and above-board manner. Why, then, has the governor vetoed a bill that establishes oversight for deals that privatize government services?

Look no further than the deal he cut to privatize the country’s most successful lottery, worth $2.7 billion in yearly sales. The 15-year contract went to the one and only bidder, with a $120 million upfront payment that helped the governor close a state budget gap. The “winning” bidder was a joint venture called Northstar New Jersey, which includes GTECH Corp.

The politically astute lottery operator hired two of Christie’s closest confidantes to see the bid through: The law firm of David Samson, who led the governor’s transition team, was paid millions for lobbying; and the public affairs firm of Mike DuHaime, Christie’s chief political strategist, got the PR contract. GTECH is on record as a $100,000 donor to the Republican Governor’s Association while Christie was chair – and after the governor agreed to lower the company’s first-year revenue target, benefiting the company and costing New Jersey taxpayers.

In his absolute veto of legislation that establishes guidelines and increases accountability in privatization deals (S-770, A-2873) the governor slammed the door on a bill that would have created sorely needed transparency and accountability in contracts that turn government services like the state lottery over to a private agency. If this bill was law, the governor’s flawed lottery deal wouldn’t have happened.

This common-sense measure requires state agencies to show taxpayers that privatizing a public service will save money by completing a cost analysis BEFORE entering into a binding contract with a private firm.  The bill requires yearly post-audits to assure taxpayers that savings continue to be achieved. Built-in employee protections give displaced workers the chance to continue to work for the new private vendor.

In his veto message, Christie said the bill restricts the ability of government to privatize services and imposes “burdensome requirements” on the private businesses that stand to benefit from the arrangements. He bristled at stipulations in the bill as “onerous,” “overly bureaucratic” and “process-laden.” He failed to mention, however, that his own Privatization Task Force made the exact recommendation that he rejected, namely that government agencies “apply a rigorous cost-benefit analysis to determine if a privatization should go forward.”

The state Senate is poised to take up this proposal again on Dec. 18 in an override vote, and we urge lawmakers of both parties to put partisan politics aside and back the measure. If privatization is such a good idea, there is no reason not to shine a light on these arrangements as the legislation would do.

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