Are Public-Private Partnerships Answer to Puget Sound Region’s Woes?

The July 5, 2013 issue of the Puget Sound Business Journal ran a compelling editorial by Cary Bozman, former mayor of the cities of Bellevue and Bremerton and former CEO of the Port of Bremerton. In the piece, Bozman urged private business leaders to step forward to assist the public sector in addressing urgent economic issues in the state. I was struck by how his theme related to a recent application I had submitted to a leadership program. The question asked applicants to address what they thought was a pressing problem facing the Puget Sound region. My thesis supported the idea that Public-Private Partnerships (PPPs), historically used solely for infrastructure/transportation projects, was a model that could be used in more innovative ways to address the region’s continuing economic issues.

I advocated for a collaborative approach (one of “shared sacrifice” as Mr. Bozeman aptly put it) between the public, private and nonprofit sectors to address current needs given how the public sector is breaking under the weight of all it is supposed to do alone. We’re seeing several examples of the devastation that results when the system breaks down completely, most recently in Detroit, in which the city recently filed bankruptcy.

[My full thesis text follows]

There’s no question that the economic recession has had a significant negative impact on the region, resulting in a huge loss of tax revenues for state, cities and other municipal entities. Yet at the same time, demand for and an obligation to services has increased – most notably in the education (more students entering our K-12 public school system) and health care (more people becoming eligible for Medicaid) sectors. The effect of the recession on federal government resources has also resulted in declining financial support to states and is expected to result in an eight (8) percent loss in resources to Washington in 2013.

Given the protracted length of time it has taken for an economic recovery, elected officials have had to make some tough decisions about how to address budget shortfalls. The sum of these reductions is translating to the loss of jobs in both the private and public sectors, and the loss of funding to vital services including Head Start, military bases, various public school programs, higher education, Department of Social & Health Services programs, job training programs for the disabled, and ESL training, among others. Additionally, our region’s nonprofit organizations, that supplement these important services, have suffered declining support from their donor bases because of job losses.

A chicken and egg scenario… our region can’t fully recover without job creation, yet without continued investment in the region jobs will be lost. It is a challenge that is not solely the responsibility of the public sector – it is the responsibility of the private sector as well. After all, in the long-term, a thriving economic region benefits everyone.

There is an opportunity for public-private partnerships (PPPs) to play a larger role in enhancing the Puget Sound region’s economic recovery by supporting not just infrastructure/transportation projects, but collaboratively to address the region’s broader economic challenges. PPPs provide an alternative to cutting spending, raising taxes and fees, deferring projects or payments, or borrowing from other agencies. Additionally, given the number of nonprofit organizations that also provide services in areas related to many of the government programs that are being cut, there is an opportunity for them – with the help of PPPs – to perhaps also play a broader role.

The current system is not working, and it cannot be the responsibility of just one sector to solve these issues. Admittedly there are complexities that would have to be addressed given the different operating models, but certainly it is worth discussing the possibilities – it’s time to think outside of the box. There could be many lessons learned from these partnerships – government and nonprofit entities could learn of more efficient ways of operating from private businesses, and the private sector could learn about the challenges of providing services on demand even when resources don’t exist. They would each gain an understanding of each other’s environments and may potentially discover ways to solve problems that may have never before been considered – again, taking different experiences and backgrounds to broaden understanding and using that new knowledge for the betterment of all.

Postscript: I wrote this thesis in April 2013, and although beating expectations, the state’s economic forecast is still sluggish and we experienced a near-miss with the Legislature’s recent budget impasse that thankfully, was resolved just in the nick of time. However, we still have a long way to go, and without attention and dedication to these ongoing challenges, the security of the state’s long-term economic health continues to be jeopardized.

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