Local governments have significantly reduced program costs through the extensive use of privatization. Up until very recently, however, state governments have been slow to follow the lead of local governments by making much greater use of privatization. Privatization that has occurred at the state level has been sporadic and limited.

This is changing. State policymakers are discovering that comprehensive privatization plans provide a powerful kit of tools to rightsize government, cut budget deficits and taxes, and increase efficiency and competition in service delivery. State privatization programs also offer an attractive alternative to common short-term solutions to budget shortfalls such as accounting gimmicks, tax increases and across-the-board spending cuts.