The Breakdown

Explaining Southern California's economy

Time to privatize the L.A. Zoo?

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I've been digging through Mayor Antonio Villaraigosa's budget proposal for Los Angeles' fiscal 2012-13. The bottom line is that the Mayor, through cuts and revenue enhancements, plans to eliminate a $200-million-plus deficit in a total budget of $7.2 billion. 

When you ponder the numbers, it's the very large ones that jump out at you:

• A police department that costs $1.3 billion to fund and consumes $449 million in pension payments, which when totaled account for nearly a quarter of the entire budget

• A City Attorney's office that costs nearly $100 million

• A city zoo that gobbles up almost $18 million per year

Okay, so that last number isn't all that huge. However, within the context of the budget deficit — $238 million — the zoo represents almost 8 percent. (And it's not even the total cost to operate the zoo, which is about $26 million annually.) You don't have to be an investment genius to recognize that figuring out a way to unload that cost would yield the city a decent return and reduce the need to, say, lay off clerks in the LAPD, something that Chief Charlie Beck has said will require the department to change the way it handles some of its business.

A $238-million deficit becomes a $220-million deficit. A small reduction, but not a trivial one.

To his credit, the Mayor in his budget proposal doesn't ignore the zoo — he says that the city will raise the admission price by $1.

But really, privatizing the zoo is a much better way to go, and there's already a roadmap to successfully achieving this goal without, you know, ending up with a bunch of mistreated animals in the middle of town. I blogged about this last August, when the city was looking into bids for an "alternative management structure" for the zoo. The key element in this plan was that the city wouldn't sell the zoo, but rather the right to operate it:

The "alternative management structure" sounds appealing because it means that the city still owns the zoo. It's pseudo-privatization. It made sense to me, until I did some digging around. Back in 1992, the World Bank outlined eight steps for successful privatization. This was at the national level, mind you. But one step jumped out at me:

Countries can benefit from privatizing management without privatizing the ownership of assets. Management contracts, leases, and concessions have been successfully used the world over, particularly in sectors where it is difficult to attract private investors. In Côte d'Ivoire, the leased water company improved technical efficiency, increased new connections, became more efficient in billing and collection of receivables --and reduced the number of expatriate employees by 70%. But because a change in ownership is usually needed to lock in performance gains, private management arrangements are likely to work best when they are a step toward full privatization. 

In other words, L.A.'s plan wouldn't be the endgame for the zoo. If a non-profit or private management firm runs the zoo better, ownership would be an eventual reward. This would wind up saving the city millions (the current [city outlay for the] zoo budget is almost $18 million, [...]). In fact, a private ownership entity would likely have to pay the city to provide things like fire services. 

Privatizing or quasi-privatizing the zoo certainly won't solve the real core problem with the budget, which is the consistently underfunded pension liabilities, most of which are owed to retired cops and firefighters. But that, along with any future reductions to the size of something like the LAPD, is going to be a tough nut to crack. For now, the goal should be to look for parts of city that can be, for wont of a better term, sold off, without sacrificing quality of life — human or animal.

Follow Matthew DeBord and the DeBord Report on Twitter.

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