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Government endorsing private companies

Should local governments get in the business of endorsing private companies?

Recently, Rock Falls residents received a letter, signed by Mayor David Blanton, that endorsed a company's offering of sewer line insurance. The company is Pennsylvania-based Service Line Warranties of America, accredited by the National League of Cities.

Service Line gives a 10 percent royalty to city government for Rock Falls customers who sign up. The city received $2,816 in 2012.

The city didn't pay for the mailing with the mayor's signature, lending only the use of its slightly altered logo. The letter served as a useful reminder that you might need sewer line insurance – for your portion of the line.

On the face, this looks like a good deal for the city. And I'm sure the Rock Falls City Council had the public interest at heart when it approved the endorsement last year.

But a further look into the endorsement is warranted.

In a news release, the company noted the city's royalty. But it didn't reveal this fact in the letter to residents. Why not?

Also unmentioned was that the National League of Cities gets money from its endorsement of Service Line.

National League spokesman Greg Minchak wouldn't disclose the amount his group gets.

"We have looked at the program," he said. "It's not purely a financial consideration. They have a good track record as a company."

The company also wouldn't disclose how much it pays National League.

A couple of years ago, the Lee County Board went another way when it was asked to endorse a private company.

A committee recommended the board support Florida-based Financial Marketing Concepts, which markets the Coast2Coast RX Card.

The company said it would give the county a royalty of $1.25 per prescription drug transaction, with some exceptions. The company promised discounts of up to 75 percent on prescriptions.

But many members didn't like the idea.

"We shouldn't be an advertising vessel for one for-profit organization," board member Lisa Zeimetz, R-Paw Paw, said at the time.

The board voted 16-8 against an endorsement.

As for sewer line insurance, Rock Falls' endorsement will likely carry weight with residents because the city runs a sewer system. That's why the company is willing to throw some money back to the city in return for use of the city logo and the mayor's signature.

Let's put this in another context: Would you want your doctor to get kickbacks in exchange for referring you to a certain specialist? Of course not. We pay doctors for their best advice, with their own financial considerations aside. In the medical world, doctors break the law when they get kickbacks for referring patients to certain specialists.

In the case of Service Line, Rock Falls and other towns are acting legally. But are such endorsements in the public interest?

David Giuliani is a reporter for Sauk Valley Media. He can be reached at dgiuliani@saukvalley or at 800-798-4085, ext. 525. 

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