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Privatizing Endeavors In Local Government: Privatization; is it all it’s cracked up to be?

*Privatization of services such as infrastructure and utilities traditionally provided by local government has expanded in common use and application with the turn of the 21st century. There are many competing views in regard to whether privatization is good or bad; regardless, the application of privatization is more prevalent now than ever before.

Better, faster and cheaper; this is the motto of the modern era of business, and became the call under which all government should adopt in its operations with the beginning of the 1980’s. The idea falls under the assumption that for too long government has not been the solution to the problems faced by the polis, but rather it was government was the problem of the people’s ills. The idea holds in belief of the free market, and that private enterprise can provide better services and goods to the people when government gets out of the way, and at a reduced costs along individuals in the polity to hold on to more of their money through reduced taxation.

The move toward privatization is the promise of reduced costs and greater efficiency than could be provided by government. These promises of the held belief in privatization have become widely accepted among all levels of government throughout the past 30 years in particular. There is however caveats that exist alongside the promises associated with privatization; concerns in regard to service quality, social equity, labor conditions and as well accountability and transparency.

Despite these concerns, public perception remains high that privatization can improve government efficiency and with no definitive empirical evidence to either debunk, or resolve that privatization is either better than government or worse, will keep privatization on the agenda for years to come until otherwise.

The goal of this paper is to explore the existing literature on the adoption of privatization of services traditionally provided by government. A review of existing case studies where governments have adopted privatization and their related affects of doing so; what were the motivations to privatize? Were the promises of costs and efficiency realized? What is the future of privatization adoption among local governments? These questions will be the focal point throughout the research of this paper.

Literature Review

Charles Tiebout (1956) sees residents of a community as “consumers” who shop around within their area of living to best select their desired goods and services which meet their needs. The underlying belief is that competition among providers to meet the consumer’s needs or wants forces providers to provide those goods and services at the most efficient level. This model proposed by Tiebout is that of a public choice theory premise, of which is the driving principle behind privatization. Tiebout asserts that by allowing a competitive market to compete within the sphere of traditional based government offerings of goods and services, will force providers to compete to provide better, more efficient, and less costly alternatives in order to attract consumers and retain them (Tiebout, 1956).

Bennet (1990) hypothesizes a similar tone exhibited by Tiebout (1956) in that privatization of traditionally provided services by government should lead to cost efficiency through the adoption of private providers. Bennet argues the adoption of private providers over government providers stems from that citizens should be viewed as customers; as customers, they should be served based on their needs and preferences; however, unlike government, there should be a focus on cost effectiveness “doing more with less”.

The adoption of privatization endeavors among local governments stems from the motivations that costs for providing services on behalf of government has only led to larger increases in costs and as a result has placed an undue burden in terms of the level taxation on residents within a locality; public support for government provided goods and services is at a low in terms of the perception that government is “inefficient”. Coupled together, these motivations have led to a greater degree of privatization adoption among local governments (Bennett, 1990).

Elliot Sclar (2000) dissents from Tiebout (1956) and Bennet (1990) by claiming that the competitive market model does not exist in the privatization of public services; instead, the author contends that privatization of traditionally provided government services leads to monopolistic/oligopolistic market economies in which there is no to little competition amongst providers which demotes the public choice theory concept held by Tiebout (1956) and Bennet (1990).

A lack of a competitive market does little to improve cost effectiveness or improved delivery of service; a monopolistic market which derives out of privatizing can instead lead to increased costs of providing services as there is no competitive market in place in which to determine market rate value, and a lack of competition provides little to no incentive for a private provider to enhance delivery service to residents “consumers” in the market.

Sclar contends that privatizing government provided services does little to promote a competitive market, and on the contrary aids in establishing monopoly markets as competition is often squeezed out; contracts which are given to private companies are often renewed and put in place little incentive for new competing companies to enter an established market which does little to drive, or spur competitive market practices. Localities instead should focus on restructuring endeavors which promote providing their services that will enhance delivery and lower costs through efficiency instead of seeking out privatization under the held belief that it will lead to greater efficiency (Sclar, 2000).

Empirical Studies

Warner and Hefetz (2004) on behalf of the ICMA tracked the changes in government’s service delivery methods i.e. traditional in comparison to privatization adoption. Beginning with the year 1982, when the ICMA first began tracking service delivery approaches among local governments; ICMA found that by 2002 at least each of the local governments surveyed employed at least one form of alternate service delivery over traditional government. Surprisingly, what has experienced the greatest amount of adoption has been the use of public private partnerships (PPP)’s which accounted between 15 and 20 percent of total service deliveries handled. The survey concludes that the adoption of a private form of service delivery has not been more renowned due to lack of competitive markets, the same criticism cited by Sclar (2000).

Jeffery (1996) unveiled that privatization on behalf o local governments is occurring all throughout the country; however, he notes that some regions of the country are experiencing a greater degree of adoption of privatization in relation to service traditionally offered by government. Southern cities in particular experienced the highest proportional growth in privatization at a rate of 158% between 1982 and 1992. Midwestern cites experienced growth of adoptive privatization at a rate of 131%, while Western cities experienced proportional growth rate of 102% and Northern cities experienced the least amount of proportional growth at a rate of 64%.

The type of services that led in privatization efforts among local governments was in support functions; support functions accounted for a rate of privatization of 508%. Public safety saw the second highest rate of privatization adoption at rate of 218%, and parks and rec. saw a privatization adoption rate of 218% overall. Jeffery (1996) contends that while the rate of privatization may not appear to be relatively as prominent according to other studies existing in the field; the author notes that the rate of adoption of privatization largely depends on the regional context and the level of market influences and budgetary conditions that exist within each locality to account for the rate of privatization adoption (1996).

Case Study: Transportation Infrastructure Privatization

The City of Chicago made headlines in January of 2005 when it became the first government to privatize an existing toll road; the Chicago Skyway Bridge was the beginning of the long-term concession agreement PPP in the United States.  The bridge was constructed in 1958 to act as a connector to the Indiana toll road and it served more than 18 million motorists in 2002 and collected record revenues in the amount of $43 million. In 2003 the bridge served over 17 million motorists and generated revenues of $39.7 million (“Chicago Privatizes”, 2004).

For almost 50 years (Chicago Skyway, 2005) the bridge was operated and maintained by the City of Chicago’s Department of Streets and Sanitation; unfortunately, the bridge had been a drain on the city’s budget since its inception and did not turn a profit until the mid to late ‘90’s. Mayor Richard M. Daley looking to alleviate the cost burdens associated with the operation of the bridge, and pay off its $400 million in debt and other debts the city of Chicago held, leased the bridge to Cintra-Macquarie a Spanish-Australian private investment consortium. In exchange to leasing the bridge for a period agreement of 99 years, the City of Chicago received a onetime cash infusion of $1.8 billion (Dannin, 2009; Ortiz & Buxbaum, 2008; GAO, 2008; Richard, 2010).

Local governments facing budget shortfalls and budgetary constraints, coupled with a need to invest in highway infrastructure development have moved forward with adoption of privatization of traditionally provided government services such as transportation infrastructure as a solution to their troubled budgets. Privatization of transportation infrastructure most commonly occurs in one of two ways; One, private investment provides the financing of a new road/bridge/roadway i.e. transportation infrastructure; in addition, to providing either all or some of the construction of the project, operation, and maintenance of the project is granted/leased to the private investment for a specified time period through a contractual agreement with the government. Two, an existing road is leased by the government to private investment which assumes control of the operation and maintenance of that road; in exchange, the government receives an up-front payment and the private investment inherits the right to collect tolls over the term of the agreement (Dannin, 2009, 2011; Richard, 2010).

Privatization of traditionally managed transportation infrastructure in the city of Chicago has showed to be a viable option for meeting the growing demands of costly transportation infrastructure transportation; privatization has shown that local governments can generate revenue through the use of leasing existing transportation infrastructure to fund other public service needs in the locality and as well cover financial budget shortfalls as a result of economic downturns (Dannin, 2009, 2011).

Caveats of Privatizing Traditionally Government Provided Services

Elisabeth R. Gerber, Christianne K. Hall, and James R. Hines Jr(2004) argue that it is incredibly hard to show the connection between efficiency and privatization empirically due to the difficulty in accounting for all the variables involved in creating a model that would be reliable. The authors note that often times the results of studies are often mixed and cite studies in relation to trash collection where in some studies private companies were more efficient than their public counterpart; but, they also reference other studies on trash collection where the opposite is true.

The authors note that depending on the service, there may be little to no incentive to provide a service at a reduced cost i.e. efficiency. Take for example the idea of a product with inelastic demand; that product, no matter the price, will always be in demand; services with inelastic demand such as education, water services, and security (police) may not lead to promised efficiency and cost savings that is often associated with privatizing adoption of traditionally government provided services (Gerber, Hines & Hall Jr., 2004).

Conclusion

Privatization adoption on behalf of local governments has been a mixed affair in terms of response and outcomes; however, privatization of traditionally government provided services has been occurring at a varied rate for the past 3 decades among localities. Adoption of a privatization model seems to be largely determined by regional economic and market environments among local governments; effects such as demand for services, and budgetary constraints can have an influential role in determining if privatization is a viable means to meet those conditions in which are faced by localities.

While efficiency and cost savings have been the predominant consensus of thought that underlie the premise of privatization, there have been instances (as seen in the city of Chicago case) where privatization was seen as a means to address budgetary shortfalls and using privatization in essence as a revenue generator for the locality. So while the consensus of thought may be predisposed to seeing privatization as a one trick pony, case studies would seem to argue there are exceptions to the norm.

Despite all the promise that may be held in privatizing traditionally government provided services, there remains contention in the field of study as to whether or not those believed promises are actually met. The research is still out and there currently is not empirically based research that either confirms privatizations benefits, or refutes those benefits as well. Research in the field has brought up concerns relating to privatization on behalf of local governments regarding issues such as accountability, and monopolistic market creation stemming from such endeavors of privatization adoption.

Despite these differences of opinion among the existing research, there is agreement however that privatization endeavors by local governments is occurring nationwide and is a distinct phenomena that is not bound to a particular region or area; the only thing that seems to vary based upon regional conditions is the rate of adoption on behalf of local governments. Whether or not privatization will either be proved of its presumed benefits or refuted is still in contention at this time and perhaps for the foreseeable future. However, privatization is occurring among local governments as they struggle with an ever evolving globalized economy, budgetary constraints, and changes of sentiment among community members in their willingness to pay increasingly more for traditionally publicly provided services.

Whether you love it or you hate it, privatization adoption by local governments is here to stay for the foreseeable future.

References

Bennett, R. (1990). Decentralization, intergovernmental relations and markets: Towards a post-welfare agenda?. New York,NY: Clarendon Press.

Tiebout, C. (1956). A pure theory of local expenditures. Journal of Political Economy, 64, 416-424.

Warner, M.E. and Amir Hefetz 2004.  Pragmatism over Politics: Alternative Service Delivery in Local Government, 1992-2002, chapter in The Municipal Year Book 2004.

Sclar, E. (2000) All in the System: Organizational Theories and Public Contracting, Chapter 5 of You Don’t Always Get What You Pay For: The Economics of Privatization.  Ithaca, NY:  Cornell University Press.

Greene, Jeffrey D. 1996. How Much Privatization: A Research Note Examining the Use of Privatization by Cities in 1982 and 1992. Policy Studies Journal 24 (Winter): 632-640.

Dannin, E. (2009, July). Infrastructure privatization contracts and their effects on governance. Retrieved from SelectedWorks of Ellen Dannin website: http://works.bepress.com/ellen_dannin/1/

Dannin, E. (2011, March). Crumbling Infrastructure, Crumbling Democracy: Infrastructure Privatization Contracts and Their Effects on State and Local Governance. Northwestern Journal of Law and Social Policy, Vol. 6, Winter 2011; The Pennsylvania State University Legal Studies Research Paper No. 14-2011. Available at SSRN: http://ssrn.com/abstract=1776350

GAO, United States Government Accountability office. (2008). Highway public private partnerships securing potential benefits and protecting the public interest could result from more rigorous up-front analysis (GAO-08-1052T). Washington, DC: Government Printing Office

Richard, S. J. (2010). The relationship between bureaucracy and the public interest: The concept of administrative responsibility. Public administration concepts and cases (pp. 438-440). Boston: Wadsworth Cengage Learning

Ortiz, I. N., & Buxbaum, J. N. (2008). Protecting the public interest in long-term concession agreements for transportation infrastructure. Public Works and Management Policy, 13(2), 126-137. Retrieved from http://pwm.sagepub.com/content/13/2/126

 

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Video of the 1st Governor’s Debate between candidates McAuliffe and Cuccinelli

The 1st debate between Gubernatorial Candidates Ken Cuccinelli and Terry McAuliffe.

PBS NewsHour senior correspondent Judy Woodruff moderated today’s (Saturday) debate, which was sponsored by the Virginia Bar Association and was held at The Homestead in Hot Springs.

Watch The Full Debate
http://www.ustream.tv/recorded/36108555

The golden arches opened up a can of worms when it tried teaching its employees about financial planning.

The fast food giant McDonald’s partnered with Visa in order to develop some financial planning resources in which to provide their workers.

The title of this resource program is called “Practical Money Skills: For Life“. The resource includes many things from guides and videos that provides information about ways in which individuals can manage their income. Everything from how to make a budget to how to save money for the future.

Now, this all sounds pretty great that the company would provide this free resource to all of its employees to aid them in helping them to construct their own personal financial plan.

However, things went south for the home of the Big Mac in a resource titled “Practical Skills Budget Journal” which provides employees with an actual budget sheet that they can fill in with their own financial information (monthly earnings).
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(http://www.practicalmoneyskills.com/mcdonalds/documents/McD_Journal2.pdf)

This is where the controversy began.

– First, the budget sheet expects that an individual is working two jobs
– Second, it does not include an area to calculate food costs
or travel costs (gas for vehicle or public transit)
– Third, health insurance cost are estimated to be only $20 a month
McDonald’s own health plan which they provide cost at minimum $14 a week

Essentially, what McDonald’s unearthed with their own “albeit” well intentions was revealing that a full-time employee working for McDonald’s can not afford to live on its given wages.

*at least, it would be expected that an individual living with only one income earner would have a difficult time making ends meet. Throw in a couple of kids and an unexpected expense and living the American dream could be far, far out of reach.

Let’s start with the first discrepancy “Working two jobs”:

The budget sheet holds that an individual working for McDonald’s reports a monthly income of $1,105. At a national minimum wage of $7.35 an hour, this would entail a worker averaging 37.5 hours a week for four weeks in a given month.

*I worked in fast food all through high school and a couple of years after. More often than not you would be lucky to average 20-30 hours a week. Hours and number of days worked fluctuate considerably in the fast food industry as the amount of labor you can have in a given day is dependent on that days sales. There were many days were employees would come into work and then after a few hours be sent home in order to contain labor costs. Typically it is only management that would be able to average 35-40+ hours a week. of course this is all dependent with each store and its given level of sales. I would wager more dense and urban areas would run daily sales much higher than those locations in sparse populated rural areas.

The budget sheet implies that a worker has a secondary monthly income of $955. This would entail a worker log in an additional 129 hours a month at 32 hours a week for a given month (under the precipice they are earning the minimum wage of $7.35 an hour).

In essence, according to the McDonald’s budget sheet an individual is working on average 69.5 hours a week. (once again, this is only estimating that the reported income for both jobs is being paid out at the national minimum wage of $7.35 an hour. Clearly, a higher wage would reduce number of reported hours worked).

The omission of “grocery expenses”

The U.S. Bureau of Labor Statistics and International Business Times reported that the average low-income ($17,563) american family spent $3,748 annually on groceries; this translates to monthly food costs of $312 a month

*these costs will adjust dependent on the number of individuals per household and location. Data is from 2011 reported data.

The cost of “gas” and “travel”

The U.S. Bureau of Labor Statistics and International Business Times reported that the average low-income ($17,563) american family spent $4,019 annually on transportation; this translates to monthly travel costs of $335 a month.

The U.S. Energy Information Administration reported that the average american household spent $250 a month on gasoline consumption (based on reported 2012 data).

*once again, these cost are dependent on actual consumption and type of travel individuals partake in (public transit, driving a personal car etc.).

Health insurance cost; if only it was “$20” a month

The budget planner provided by McDonald’s in a partnership with Visa calculated that monthly health insurance cost would be $20. If only! Unfortunately, the actual cost of health insurance is far more than that.

The Henry J. Kaiser Family Foundation reported that in 2010 the average health insurance premium in the individual market was $215.

McDonald’s own health insurance plan (limited benefits plan) cost workers $14 a week which capped annual benefits at $2,000 and $10,000 in total care annually.

*With the advent of the affordable care act it is likely the plan will be scrapped. The employer mandate has been suspended for an additional year, but the individual mandate requirement will begin as scheduled. In turn, this could costs workers even more each month to participate in the health exchanges set up by the ACA  or pay a lump sum penalty. More about the employer mandate requirement here.

In the end, McDonald’s has “unintentionally” brought upon itself some unflattering PR. What may have been a well intended program/resource for its employers has turned out to only draw the ire of the public against McDonald’s and the wage structure by which they pay their employees.

To make matters worse, a McDonald’s employee passed out from heat exhaustion and was hospitalized after being forced to work after the air conditioning for the restaurant failed during a heat wage. It promoted workers to walk out of the restaurant in protest of working conditions.

Not a good week at all for the golden arches.

But, I believe they will still be serving millions of cheeseburgers tomorrow as people are more than eager to pay for their “presumed” deliciousness no matter what McDonald’s employees are paid or the conditions they have to work in.

Personal Note
*If you don’t like how the company represents/treats its employees, I’d recommend you stop giving them your money. You would be surprised how responsive a company is when the bottom line is affected as a result. I’m sure Burger King would welcome the sales…they probably need it.

Courtesy of Forbes
http://www.forbes.com/sites/laurashin/2013/07/18/why-mcdonalds-employee-budget-has-everyone-up-in-arms/

Courtesy of The Wall Street Journal
http://online.wsj.com/article/SB10001424052748703431604575522413101063070.html?mod=e2tw

Courtesy of Death and Taxes
http://www.deathandtaxesmag.com/202172/mcdonalds-suggested-budget-for-employees-shows-just-how-impossible-it-is-to-get-by-on-minimum-wage/

Courtesy of CNN Money
http://money.cnn.com/gallery/news/economy/2013/07/17/mcdonalds-worker-budget/index.html

How bankruptcy could be Detroit’s Robocop on a White Horse moment. A new beginning for the motor city.

On July 18th, 2013. The largest city to ever file for bankruptcy in U.S. history has happened. The city of Detroit, the motor city, has filed for the municipal version of bankruptcy.

Just like Detroit’s flagship industry and business (the auto industry, General Motors) filed for bankruptcy in 2009, it seems it is the City’s turn to do so.

Detroit is one of America’s oldest and most richest cities (at least back in the day it was) but for over a century the city has slowly deteriorated bit by bit over the years. Detroit was known as the home for the automotive (General Motors headquarters is located in Detroit) housing production plants for Chrysler, Dodge, Studebaker and of course General Motors (Cadillac, Chevrolet etc.). The boom years lasted from 1910 till the end of 1950; the 40 year time span saw Detroit flourish and grow with industry, small business and 1.8 million individuals lived and worked within the city.

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(http://www.cstse.es/?p=4502)

In addition to the auto industry there was also manufacturing, mining, steel mills and foundries all dotted the city. Now, what remains is a shadow of its former glory. Only two automotive plants remain within Detroit (one for Chrysler and one for GM). Only 20,000 of the remaining 714,000 individuals that still live in Detroit actually work in manufacturing.

So what happened to the motor city? Where did 1 million residents disappear to? What happened to the automotive plants and the factories and the copper mines?

Over the course of a century Detroit experienced a multitude of factors which influenced its untimely demise in a sense.

Beginning in the 1940’s up to the 1990’s the automotive giants began implementing a new growth strategy that did not include Detroit. For decades, the auto industry mass produced vehicles in the motor city and shipped them across the U.S. Over time however, the automotive giants began implementing a strategy of building automotive plants where individuals were buying vehicles. This is how auto plants ended up in Georgia or Tennessee and Mississippi for example.

The growth strategy essentially moved production from Detroit to these newly created production facilities across the nation.

Of course these plants are now closed as well, the difference between them and Detroit is that they were not solely reliant on the auto industry for their economy. They existed before the auto industry and would continue after. Detroit on the other hand had become a city dependent on the automotive giants since their prosperous beginnings.

In addition to these changes there has been the advent of globalization. Manufacturing, steel production and automotive production began a shift in the late 1980’s to begin moving overseas or across borders to set up shop. This in turn aided in the deterioration of Detroit’s reliance on the manufacturing and automotive industry.

The loss of these jobs and those industries which benefited from them over time has accounted for the motor city’s record high unemployment of 16%…that is double the national average.

This is only half the story…

The second half has to deal with demographic shifts that began to occur as far back as 1950.

Planners in Detroit envisioned the growth in the city to occur in three different areas of the city. However, as WWII came to a close and veterans began returning home, something happened the planners did not account for. Veterans decided to move out into the suburbs instead of returning to their old city homes and neighborhoods.

Then there was the great riot of 1967 which many signal as the “white flight” event that sent 100’s of thousands of white residents to flee the city and move to the suburbs.

Though the 1967 riot did influence demographic shifts, those shifts were already occurring more than a decade earlier following the end of WWII.

As the more affluent tax payer began to leave the city, over time this further aided in the erosion of the motor city’s financial base. With the more affluent citizens leaving the city, along with them went small businesses, housing properties, business sales and tax revenues.

This in turn has led the city to accumulate more than $17 million liabilities (pension payments to retired workers, health benefits and accumulated debt from borrowed lenders).

As it stands down, every resident of Detroit is $25,000 in debt when examining what is owed and how many residents still remain in the city.

The Governor of Michigan, Rick Snyder appointed Kevyn Orr a bankruptcy lawyer as the city’s emergency manager to devise a reconstruction plan and get the city back on track. By June, Orr had declared the city was insolvent. It has become so bad that it was ‘kicked around” that Detroit could sell its collected artworks to generate some cash to help pay down its debt obligations.

There may be a silver lining in all this…

By going into bankruptcy this could allow the city to get out from under its debt obligations as bankruptcy court would force creditors to take pennies on the dollar as repayment. In addition, this could force unions to accept benefit payment and compensation reductions (union leaders had been fighting the City to not accept any concessions that may reduce benefit payments to their members). With so much accumulated liabilities in the billions, benefits will more than likely be reduced.

In 2009, the motor city’s most recognized business filed for bankruptcy. In 2013, that same business reported a $6 Billion dollar profit. That business was General Motors. The same could be said for Detroit itself. After GM went through structured bankruptcy it was able to shed its debt obligations, drop consuming and wasteful expenses and emerged from bankruptcy a leaner and less debt burdened company.

Detroit could have the same experience. If it can shed its debt obligations, get its liabilities under control and emerge from bankruptcy a healthier less debt burdened city, it could be just the thing to aid the motor city’s return to greatness.

Courtesy of The Economist
http://www.economist.com/blogs/democracyinamerica/2013/07/detroit-files-bankruptcy

Courtesy of Changing Gears
http://www.changinggears.info/2011/03/23/detroit-a-boom-town-goes-bust/

Be very, very quiet…I’m hunting U.S. Government operated Drones.

Colorado residents want to enact “Open Season” on Drones.

The small town of Deer Trail Colorado, which is known as the home of the first rodeo, may soon become known as the first “Drone Hunt” as well come early August.

Phillip Steel, a Deer Trail resident drafted an “anti-drone” ordinance to be brought before the towns governing board in early August for a vote.

A snippet of the drafted ordinance is as follows:

“The Town of Deer Trail shall issue a reward of $100 to any shooter who presents a valid hunting license and the following identifiable parts of an unmanned aerial vehicle whose markings and configuration are consistent with those used on any similar craft known to be owned or operated by the United States federal government.”

Though Steel (Author of the ordinance) has never seen an actual Drone flying over his town of Deer Trail, he states that the anti-drone ordinance is more of a symbolic ordinance. Steel expresses that this ordinance serves as a form of protest to the Nation’s increasing and constituted use of domestic surveillance programs:

“I do not believe in the idea of a surveillance society, and I believe we are heading that way.”

If the ordinance is approved by vote among the Towns governing board, it (the town of Deer Field) would begin issuing “Drone Hunting” licenses for $25 annually. The license will allow individuals (both residents of Deer Field and non-residents) to hunt Drones within the Deer Trail territory and airspace.

In addition to granting the ability to hunt drones, the ordinance would also establish a bounty system by which verified “hits” on drones would be rewarded with monetary compensation:
“Bring in a fuselage or a wing with markings from the U.S. government, and the town will pay you $25. A whole drone, that’s worth $100.”

Town leaders see the ordinance as “harmless” and as a possible revenue generator for the small Town. “Even if a tiny percentage of people get online (for a) drone license, that’s cool. That’s a lot of money to a small town like us…Could be known for it as well, which probably might be a mixed blessing, but what the heck?” said David Boyd, one of the seven members of the Town’s governing board.

Town clerk, Kim Oldfield believes the anti-drone “hunting” ordinance could be a positive thing for the community. First, there is the money the licenses would bring in; second, Deer Field has been discussing crafting an entire festival around the idea that could lead to tourism and attention for the small Town. Finally, the novelty and uniqueness of the ordinance could be just the thing to bring members of the community together.

There are some stipulations about what can be used for hunting drones and who can receive a license. The ordinance specifies that weapons used for engagement of unmanned aerial vehicles would be limited to, any shotgun, 12 gauge or smaller, having a barrel length of 18 inches or greater.

Drone hunting licenses would be issued without a background investigation, and on an anonymous basis. Applicants would have to be at least 21 years old and be able to, “read and understand English.

Overall, the community seems to be in favor of the ordinance and of course additional changes can be made to the ordinance when it comes up for discussion at the Town’s next scheduled meeting in early August.

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If the ordinance does manage to be approved by the Town’s governing board, there will still be legal hurdles it will need to overcome before the practice can actually be held to be “legal”. Shooting at federal government property for one is “very illegal”.

The good news is that Deer field’s governing board understands that no one will actually be shooting down any federal government drones anytime soon, nor do they expect to pay out any bounties on successfully hunted drones.

At the end of the day, the ordinance is less “realistic” and more about sending a message and generating an attraction for a small town.

Courtesy of ABC Channel 7 News
http://www.thedenverchannel.com/news/eastern-plains/town-of-deer-trail-considering-hunting-licenses-for-unmanned-aerial-vehicles-bounties-for-drones

Courtesy of The Huffington Post
http://www.huffingtonpost.com/2013/07/17/drone-hunting-deer-trail-colorado_n_3611806.html

A draft of the actual ordinance
http://www.deertrailcolorado.com/drones.html

The Race for Governor of Virginia between candidates Terry McAuliffe and Ken Cuccinelli will debate this Saturday.

Cuccinelli/McAuliffe debate will be streamed live Saturday.

The Virginia Bar Association and sponsor firms LeClairRyan, MercerTrigiani, Sensei Enterprises Inc. and Spotts Fain PC, along with PBS, will present the debate live through Internet streaming on newshour.PBS.org. Candidates Ken Cuccinelli, the Republican, and Terry McAuliffe, the Democrat, will meet face-to-face from 11 a.m. to 12:30 p.m. Saturday, July 20. Judy Woodruff, co-anchor of “PBS NewsHour,” will moderate.

The debate will be streamed on the “PBS NewsHour” UStream channel, found at http://www.ustream.tv/pbsnewshour

Courtesy of Roanoke Free Press
http://www.roanokefreepress.com/cuccinellimcauliffe-debate-will-be-live-streamed-saturday/

Governor’s race in Virginia is all about the Money. Interestingly, it may all be about “where” that money is coming from as well.

The Commonwealth of Virginia’s Governors Race is all about the money…Especially the money coming from outside of the state.

The latest campaign financial disclosures report that Democratic candidate Terry McAuliffe is out earning Republican candidate Ken Cuccinelli in campaign contributions reported for the month of June.

McAuliffe reported a balance of $6 million for the end of June.

Cuccinelli reported a balance of $2.65 million for the end of June.

McAullife is out earning Cuccinelli in both large contributions (donations over $100) and as well small individual contributions (donations under $100).

Reported Campaign Contributions for the month of June 2013:

Terry McAuliffe

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Ken Cuccinelli

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The interesting caveat of these donations is where exactly they are coming from.

80% of Democratic candidate Terry McAulife’s campaign contributions have come from outside the state of Virginia (Total 2013 donations up till May).

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60% of Republican candidate Ken Cuccinelli’s campaign contributions have come from outside the state of Virginia (Total 2013 donations up till May).

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Terry Mcauliffe’s Top 5 Donors are all from outside the state of Virginia:

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Ken Cuccinelli’s Top 5 Donors contain at least 2 donors from within Virginia while the remaining three are from outside the state:

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Both candidates Top donors are respectively from their respective political parties’ organization.

The question is how these campaign contributions will translate into individual votes come November. It is still relatively early in the campaign and it is expected to see considerable increases in recorded campaign contributions as the date of the election approaches.

Courtesy of WatchDog.org
http://watchdog.org/95676/gubernatiorial-candidates-vie-for-small-donations-voter-engagement/
http://watchdog.org/95630/none-of-mcauliffes-top-18-donors-are-from-virginia/

Courtesy of Virginia Public Access Project
http://www.vpap.org/candidates/profile/home/45489 (Top Donors Cuccinelli)
http://www.vpap.org/candidates/profile/home/11897 (Top Donors McAuliffe)

Accepting or Rejecting the Medicaid expansion provision contained in the ACA will be determined by outcome of the Virginia Governor’s race this November.

McAuliffe or Cuccinelli; depending on who is elected as the next Governor of the Commonwealth of Virginia will largely determine whether or not Virginia opts in or opts out of the Affordable Care Acts Medicaid Expansion.

The current Governor, Bob McDonnell has stated opposition for enrolling in the ACA’s Medicaid expansion program. However, his term comes to an end at the end of the year. November will ultimately determine as to whether or not the Medicaid expansion is pursued.

So what is the Medicaid expansion anyway?

One of the essential objectives of the ACA is to expand medical insurance coverage to those individuals that lack coverage (400,000 Virginian’s are estimated to be without health insurance). In order to extend coverage to those individuals health insurance is the Medicaid expansion provision. This provision sets that states must cover all residents ages 19 to 65 who have a household income below 133% of the federal poverty level (FPL). That’s nearly $32,000 for a family of four, and $15,400 for an individual.

To cover these individuals that fall within these categories, the federal government would cover 100% of the difference between a state’s current Medicaid eligibility level and the ACA minimum for years 2014-2017. Federal contributions to the expansion will drop to 95% in 2017 and remain at 90% after 2020.

For Gubernatorial candidates Terry McAuliffe (Democrat Party Nominated Candidate) and Ken Cuccinelli (Republican Party Candidate) the fate of the Medicaid expansion will be clear depending on who is elected McAuliffe in support and Cuccinelli in opposition).

Both candidates have used the Medicaid expansion conundrum to develop their own respective “pitch” to the Virginia public. McAuliffe sees the Medicaid expansion enrollment as an opportunity that will create thousands of jobs for Virginians, lower the cost of health care and insurance premiums and provide coverage to thousands of individuals in need of health care who have previously been unable to afford it.

Cuccinelli on the other hand has used the Medicaid expansion as a message of government paternalism; that is to say, the federal government is limiting an individual’s liberty and autonomy. In addition, the Medicaid expansion is promoted as expanding an already inefficient, wasteful and costly social welfare program that will ultimately pass on those growing costs to Virginians which could threaten economic growth and stability.

Here we have two candidates, two contrasting outcomes as what will become of the Medicaid expansion in the Commonwealth of Virginia when the race for Governor comes to a head this November.

American moral/political philosopher John Rawls probably best encapsulates the underlying principles as to why states should enroll in the Medicaid expansion provision of the ACA. In 1971, Rawls wrote “A Theory of Justice” in which he outlined which is known as the original position. The theory holds that in order to create a “just” society between individuals, all decisions should be made behind a veil of ignorance.

The hypothetical Rawls proposed held that when a group of individuals is brought together to discuss the ideal political/economic structure of society and reach an agreement of what that society is. However, when making the decisions as to “what” that society is, they do so with a level of ignorance (lack of knowledge, race, sex etc.) and by doing so these individuals will make decisions that will maximize their advantage. The crux of this is that all of the individuals must agree and out of this they in turn will develop a system of moral requirements when crafting what is socially just (you differentiate what parts of an individual to ignore and what parts to consider).

Essentially, Rawls was designing a way by which social equitability would be developed through a societal consensus of what is morally right. Examples: Is it morally right to offer all individuals access to education, food, water and shelter. Is it morally right to hold individuals as equal (treat them the same).

When we consider Rawls original position and his belief in distributive justice (socially just allocation of goods) with emphasis in attaining equality within society; the Medicaid expansion provision is a type of public policy that sits soundly with the work of Rawls as it seeks to create a “just” society as members, no matter their economic condition, racial ethnicity or sex is ignored and instead focuses on awarding individuals the same opportunities in life.

Currently, low income individuals whom lack access to healthcare are at a disadvantage in enjoying granted liberties (freedom of speech and assembly) due to the positions in which they find themselves in and marginalizes pursuit of those said liberties. Rawls equality principle outlines that we would want those in society to view life as worth living and allow pursuit of personal opportunities. This is ensuring that all individuals have an ability to enjoy granted freedoms and liberties.

By allowing those disadvantaged in society to be granted health insurance coverage, you then facilitate a condition for these individuals to enjoy other associated freedoms and granted liberties that they may have otherwise been unable to enjoy.

Depending on who wins the election for Governor this November will as well determine the type of moral/political philosophy in which Virginia will subscribe to.

Courtesy of PBS News Hour
http://www.pbs.org/newshour/bb/politics/jan-june13/cuccinelli_03-05.html

Courtesy of Watchdog.org Virginia Bureau
http://watchdog.org/95447/governors-race-may-decide-medicaid-expansion-debate-in-va/

Courtesy of McAuliffe for Governor
http://terrymcauliffe.com/on-the-issues/healthcare/healthcare-policy/

Courtesy of the Medicaid Innovation and Reform Commission
http://mirc.virginia.gov/about.html

Courtesy of The Advisory Board Company
http://www.advisory.com/Daily-Briefing/Resources/Primers/Medicaid-expansion

Courtesy of The Roanoke Times
http://www.roanoke.com/news/obamacare/1979704-12/virginia-still-undecided-on-medicaid-expansion.html

More individuals projected to die by firearm related fatalities than automobile accident fatalities. Some states have already passed the threshold.

Gun Deaths in the United States are projected to surpass the number of fatalities resulting from traffic accidents by Year 2015.

The Center for Disease Control and Prevention has calculated that by the Year 2015, the number of deaths resulting from Gun use (intentional & unintentional) will surpass deaths resulting from traffic accidents.

The data shows that violent crimes and murder rates have fallen 19% from year 2006 to 2011. Contrary to this, the number of gun deaths by homicide, suicide and accident rose in year 2010 (31,328) after it had decreased for the past decade following an all time high in 1993 (37,666).

The fall in related gun deaths following the all time high reported in 1993 has been attributed to an increase in the number of individuals incarcerated, police crackdown on illegal ownership of firearms and a decrease in violence related to drug trafficking.

The number of firearms owned among households has decreased 32% from 2004-2010.

2013 has been a year of increased gun sales (amid potential new gun restriction laws) as firearm companies have seen significant increases in sales; Smith and Weston reported increased sales of 40% in the quarter ending January 31st. Cabela’s, an outdoor and recreation business recorded increases in store sales of 29%.

If more guns are being sold and gun ownership is increasing, then clearly this should correlate with some level of increase in related firearm fatalities right? The Johns Hopkins University Center for Gun Policy and Research reports that “historically” that as the level of firearm ownership increases, it will overtime correlate with increases in related fatalities resulting from firearms; the caveat being that these increases do not appear until over a period of time once the install base has increased.

What about car fatalities?

Fatalities resulting from traffic accidents reported their lowest rate of occurrence since 1949. The National Highway Traffic administration reports that the decrease in traffic related fatalities is a result of improved safety technology in vehicles produced and improved driver response. Together, these factors have aided in reducing the number of recorded vehicle related fatalities.

Nationwide, the number of individuals killed in a car accident still remains high 32,835 while total gun related deaths (homicide, suicide, accident) were reported at 31,672 (suicide gun deaths accounted for 19,392).

Now, looking at individual states across the U.S. some has already crossed the threshold in which gun related fatalities have exceeded automobile related fatalities:

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It is important to keep in context that not all gun/firearm deaths result from “homicide” or “violent crimes; firearm accidents and suicides account for a large share of those recorded deaths. Suicides utilizing a firearm accounted for 61% of recorded fatalities resulting from use of a firearm in 2010.

So why compare cars and firearm deaths? Historically, car related fatalities have been emphasized by media outlets, government representatives/agencies and community groups. This in turn may have aided in the development of safety products and services that have become commonplace in new vehicles produced. In conjunction, the emphasis on training and safety courses to enhance driver education.

As we see increases in related fatalities resulting from firearm use, this should as well be a platform by which to advocate for a greater extent and availability of training and safety programs. Not to mention, mental health support services as the majority share of related firearm fatalities seem to be resulting from suicides.

Courtesy of Bloomberg
http://www.bloomberg.com/news/2012-12-19/american-gun-deaths-to-exceed-traffic-fatalities-by-2015.html

Courtesy of Mother Jones
http://www.motherjones.com/politics/2013/03/state-map-gun-suicides-traffic-deaths

Courtesy of NBC News Business
http://www.nbcnews.com/business/gun-sales-still-surging-gun-company-stocks-languish-6C9756583

Courtesy of The Johns Hopkins Center for Gun Policy and Research
http://www.jhsph.edu/research/centers-and-institutes/johns-hopkins-center-for-gun-policy-and-research/

How destroying 100 computers cost the taxpayer $2.7 million. A lesson in communication.

If your computers get a virus…The best option is to pay someone to destroy it, that is until you run out of money to pay someone to destroy it.

How $2.7 million of taxpayer collected revenues were essentially “wasted” as a result of poor communication and overacting.

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In December of 2011, the Department of Homeland Security contacted two federal agencies about possible malware infections being identified in their networks. Those two agencies were  the National Oceanic and Atmospheric Administration (NOAA) and the Economic Development Administration (EDA).

One of these agencies cleared the problem up within a few weeks, while the other took nearly a year and some additional “destructive measures”.

The agency that took over  a year to correct the identified malware infection was the EDA.

What happened over the course of a year is a strong case example of when communication lines breakdown between levels of the hierarchy within the agency organization and the damage of poor senior leadership.

The EDA responded to the malware warning by first removing its connections to the Hubert Hoover buildings network connections (essentially disconnecting itself from the world). The agency had thought that nearly half of their computers had become infected (146 out of 250). This prompted the agency to contact an IT contractor (Commerce department incident response team) to come to the agency and inspect how many machines were actually infected by malware.

The response team initially reported that 146 machines had been infected, however, this was a false analysis. The incident response team then communicated to the EDA that it had revised its analysis and found only two machines were actually infected.

Unfortunately, the revised analysis was not made clear by the incident response team and the EDA IT team did not understand nor get confirmation about the revised number of actually infected machines.

This failure of communication between the two departments was not discovered until a year later after an audit report was conducted that discovered this lapse in adequate notification.

Under the impression that half of its machines were infected with malware, “the chief information officer, who was relatively new to the bureau, thought the agency was under [a percieved threat of a cyber attack] based on what he knew about EDA’s long-standing cyber challenges. The IG said EDA had outstanding cyber vulnerabilities, which auditors first highlighted four years ago.”

Under the impression that the agency was under a possible attack (thinking half of its hardware was infected) decided on a policy action which physically destroyed (uninfected) desktop computers, printers, cameras, keyboards, and even mice. The destruction stopped when the agency had run out of money to pay for destroying the hardware.

In total, over $170,000 of hardware was physically destroyed before the agency had run out of money.

The total cost to the taxpayer was $2.7 million:

-$823,000 for the contractor to investigate
-$1,061,000 for the acquisition of temporary hardware (requisitioned from the Census Bureau since they destroyed half of their own equipment)
-$4,300 to destroy $170,500 in IT equipment (service paid to destroy the hardware)
-$688,000 paid to contractors to assist in development of a long-term response.

Additional cost unaccounted for was the disruption of the agencies provided services as it dealt with this incidence.

All of the details that led up to this unnecessary and “overacted” destruction was detailed by the Commerce Departments Office of the Inspector General Report released June 26th, 2013.

$2.7 million was not a total lost as it allowed the agency to “learn” from its mistake in ensuring accurate and confirmed information sharing between agencies and that when in doubt, you do not have to throw the baby out with the bathwater.

As Joseph Beal, the chief information security officer at CCSi stated:
“We learned in this and many other cases, you just can’t throw people and technology at a problem. More so, you need to sometimes just pick up the phone and say, ‘This is exactly what we are seeing and this is what we have. We need to at least try to define some way of containing what we have and what is the impact of our business mission,'” said Beal, who has worked with several agencies to address cyber-security challenges, including DHS, Transportation and the Marine Corps. “I think that is where this situation fell short. You see there were multiple emails that went back and forth between multiple constituents. After four or five emails, there’s a rule of thumb for my guys that says if you have four or five emails from someone, you need to pick up the phone so you have clear understanding of the issue and you know what’s going on.”

Courtesy of Arstechnica
http://arstechnica.com/information-technology/2013/07/us-agency-baffled-by-modern-technology-destroys-mice-to-get-rid-of-viruses/

Courtesy of the Office of the Inspector General at the Department of Commerce
http://www.oig.doc.gov/OIGPublications/OIG-13-027-A.pdf

Courtesy of Federal news radio
http://www.federalnewsradio.com/241/3382009/EDAs-overreaction-to-cyber-attack-highlights-every-agencys-challenge

Gabriel Lucatero

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