Going private: states pawn off public services.

• Author: Colatosti, Camille

As clinic workers protested, armed security guards forcibly evicted emotionally and mentally impaired patients from Detroit's Lafayette Clinic last October. Closed since then, the clinic was the only public psychiatric research hospital in Michigan.

"Patients were treated like cattle," according to the United Auto Workers' magazine Solidarity. "Ordered to pack their bags, they were herded into buses as friends and relatives called tearfully from behind fences."

"I'll never get over what I saw," says Deborah Dell'Orco, spokeswoman for UAW Local 6000, which represents 22,000 state employees. "It was a holocaust for the mentally ill."

The patients and workers at Lafayette Clinic were the latest casualties of privatization - the process of selling public services to private firms. Naming privatization as one of his guiding principles of government, Michigan Governor John Engler promised to "return to the private sector those state operations that can be more effectively and efficiently performed by the private sector."

Patient dumping, transferring state clients to corporate providers, saves the state the cost of running its own institutions. It also benefits the private facility, which accepts the patient's Medicaid and Supplemental Security Income. But it can prove dangerous for patients.

Stories abound of substandard care received at private institutions. Patients are neglected: they live in dangerous conditions and suffer physical abuse. Beverly Enterprises, for example, the nation's largest for-profit nursing-home chain, has been cited for 173 major patient-care violations and class-action suits alleging wrongful death are pending in Michigan, Georgia, and Florida.

But Governor Engler claims that Michigan, facing a budget deficit for the third year in a row, has no choice but to pare down. And Michigan is not alone in its decision to reduce state services and rely on the private sector instead. Trying to trim the size of state and local government is a national trend.

In part, this trend results from a severe economic crisis. In 1991, forty-seven states spent more than they took in. And 1992 wasn't much better: thirty-five states that had adopted balanced budgets again confronted deficits.

The reasons for the deficits include:

[paragraph] The recession. "During tough economic times," says Mike Ettlinger of the Washington, D.C.-based Citizens for Tax Justice, "high unemployment means declines in personal income tax and increases in welfare and social-service costs."

[paragraph] The decline in Federal aid to states and cities. Between 1980 and 1989, the real value of grants to state and local governments dropped by 38 per cent. In 1979, Federal aid accounted for 22 per cent of state and local budgets, in 1989, it made up only 16 per cent.

[paragraph] Regressive tax systems. States raise revenue primarily from low- and middle-income people, not the wealthy and corporations. According to A Far Cry from Fair, a report by Citizens for Tax Justice, "Forty-four states and the District of Columbia tax the very rich at lower rates than they tax the poor. In five states - Nevada, Texas, Florida, Washington, and South Dakota - the poor pay five times as great a share of their incomes in state and local taxes as do the rich."

As Ettlinger explains, "Soaking the poor just doesn't raise enough money to support a modern economy, especially when you consider the current distribution wealth in the United States. The richest 1 per cent of all families make more than the bottom 40 per cent. The top fifth make more than everyone else Put together."

Still, budget crises...