... ou. .- ., ..----Summary 509· Business leaders in the municipalitieswhere the two facilities would be constructed are in
favor of the project because it would create more jobs and increase the tax base. These
leaders promote the project as a win-win opportunity for government and industry, where
the state can benefit by reducing costs, and the electric utilities can improve their service
by focusing more effectively on residential customers and their needs.
·The lieutenantgovernoris promotingthis project, proclaimingthat it is an excellentexample
of "initiating proactive and creative solutions to the problems that this state faces."· Federal and state regulatory agencies are closely watching this project with respect to
the Clean Air Act. Speculation is that the state plans to use a high-sulfur grade of local
coal exclusively.Thus "stack scrubbers" would be required, or the high-sulfur coal would
have to be mixed with lower-sulfurcoal imported from other states to bring the overall air
emissions in line with federal standards. The governor is using this opportunity to make
the point that "the people of this state don't need regulators to tell us if we can use our own
coal!"
·The state's coal operators and mining unions are very much in favor of this project. They
see the increased demands for coal and the governor's pro-labor advocacyas very positive.
They plan to lobby the legislature strongly in favor of the project.·Land preservation and environmentalgroups are strongly opposing the proposed project.
They have studied the potential negative impacts of this project on the land and on water
and air quality,as well as on the ecosystemand wildlife, in the areas where thetwo facilities
would be constructed. Environmentalistshave started a public awareness campaign urging
the governor to act as the "chief steward" of the natural beauty and resources of the
state.Will the project be funded? We can only guess. Clearly, however, we can see the competing
influences that can be, and often are, part of decision making in the public sector.SUMMARY
Economic analysis and decision making in government is notably different from these
processes in the private sector because the basic objectivesof the public and private sectors
are fundamentally different.Government investmentsin projects seek to maximize benefits
to thegreatest number of citizens,while minimizing thedisbenefits to citizensandcosts
to the government.Private firms, on the other hand, are focused primarily on maximizing
stockholder wealth.
Several factors, not affecting private firms, enter into the decision-making process in
government. The source of capital for public projects is limited primarily to taxes and
bonds. Government bonds issued for project construction are subject to legislative restric.-
tions on debt not required for private firms. Also, raising tax and bond monies involves
sometimes long and politically charged processes not present in the private sector. In ad-
dition, government projects tend to be larger in scale than those of competitive firms and I¥;
to affect many more people and groups in the population. All these factors slow down
the process and make investment decision analysis more difficultfor government decision-- -- --