State Senate Narrowly Defeats Privatization Measure : Legislation: Bill backed by Sen. Marian Bergeson (R-Newport Beach) would have let counties contract out government jobs.

SACRAMENTO — Inundated by opposition from organized labor, the state Senate narrowly defeated a bill Thursday that would have given Orange County and dozens of other California counties the ability to save money by contracting out a variety of government jobs.

The legislation, pushed by state Sen. Marian Bergeson (R-Newport Beach), was killed on the Senate floor for the second consecutive year after public employee labor unions lobbied hard against it, arguing that such privatization efforts would cost jobs.

Although the bill went down to a lopsided defeat last year, it garnered the support of 18 lawmakers Thursday, just three short of the majority needed to clear the Senate.

Bergeson remained hopeful that the measure might be revived in some form in coming weeks as the Legislature and Gov. Pete Wilson tussle over ways to stem a $9-billion state budget shortfall. The governor has proposed stripping billions of dollars from local jurisdictions like Orange County, where public agencies face an $80-million shortfall. The bill would have allowed counties up and down the state to contract out a wide array of jobs, from tree trimming and airport security to dogcatchers at the county animal shelter.

“How can we talk about taking money away from local governments and not allow them the ability to provide services in a manner that is most cost-effective?” Bergeson argued. “Now, more than ever, all counties must be given the freedom to explore every possible method of providing services.”

When the bill was introduced earlier this year, Bergeson expressed confidence that it might fare better than it did last session, suggesting that county governments around the state would more adroitly band together to back the legislation.

She also predicted that labor unions, which provide large infusions of campaign cash to a multitude of lawmakers in Sacramento, would not be able to wield as much influence over legislators because this is not an election year.

Although the bill earned the backing of elected leaders in 19 counties, those officials in the end could not sway enough Democratic lawmakers to break ranks and support the measure, which won unanimous support from Bergeson’s fellow Senate Republicans.

Labor leaders also once again fought hard against the measure, which they said would ultimately cost taxpayers more money and put hundreds of government workers in unemployment lines. They also warned that accountability problems could crop up when private firms start making decisions affecting the public and the allocation of tax dollars.

“This thing getting defeated is the best news I’ve heard in I don’t know how long,” said Bob Wilberg, secretary-treasurer of the Service Employees International Union’s Orange County chapter. “We would have ended up with taxpayers’ subsidizing business without any accountability.”

Under privatization, Wilberg and other labor leaders argued, the amount of money county governments save in wages would be eroded by higher costs to taxpayers for public health and social services because government workers would lose their jobs and be forced to seek assistance from county hospitals and other social service providers.

Low-wage replacement workers with no benefits would also depend on the county for medical attention, they said.

“As soon as they start hiring people for minimum wage without benefits, who is benefiting from that?” Wilberg asked.

But supporters of privatization said that public employees typically are absorbed by the private firms that take over government services. They also argued that local governments will be forced to make broad layoffs if they are not given the power to contract out some county jobs.

“If the private sector can get the job done more cheaply, maybe the public sector has priced itself out,” said Ronald S. Rubino, Orange County’s budget director. “County jobs are not an indirect way of providing social services.”

Moreover, in Orange County the privatization efforts would have affected very few government workers, Rubino said, although the savings could have amounted to about $2 million a year.

Currently, 12 counties in California have the ability to contract out services because they were established by legal charters and are not subject to state employment procedures. Orange County and more than three dozen other counties in the state are “general law” jurisdictions that do not enjoy such powers.

The bill would have permitted all counties to privatize services, in effect “leveling the playing field,” Bergeson told her Senate colleagues Thursday.