Cash-strapped states weigh selling roads, parks

ST. PAUL, Minn. — Minnesota is deep in the hole financially, but the state still owns a premier golf resort, a sprawling amateur sports complex, a big airport, a major zoo and land holdings the size of the Central American country of Belize.

Valuables like these are in for a closer look as 44 states cope with deficits.

Like families pawning the silver to get through a tight spot, states such as Minnesota, New York, Massachusetts and Illinois are thinking of selling or leasing toll roads, parks, lotteries and other assets to raise desperately needed cash.

Minnesota Gov. Tim Pawlenty has hinted that his January budget proposal will include proposals to privatize some of what the state owns or does. The Republican is looking for cash to help close a $5.27 billion deficit without raising taxes.

GOP lawmakers are pushing to privatize the Minneapolis-St. Paul International Airport and the state lottery. Both steps require a higher authority _ federal legislation in the case of the airport, a voter-approved constitutional amendment for the lottery. But one lawmaker estimated an airport deal could bring in at least $2.5 billion, and the lottery $500 million.

Massachusetts lawmakers are considering putting the Massachusetts Turnpike in private hands. That could bring in upfront money to help with a $1.4 billion deficit, while also saving on highway operating costs.

In New York, Democratic Gov. David Paterson appointed a commission to look into leasing state assets, including the Tappan Zee Bridge north of New York City, the lottery, golf courses, toll roads, parks and beaches. Recommendations are expected next month.

Such projects could be attractive to private investors and public pension funds looking for safe places to put their money in this scary economy, said Leonard Gilroy, a privatization expert with the market-oriented Reason Foundation in Los Angeles.

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"Infrastructure is more attractive today than ever," Gilroy said. "It's tangible. It's a road. It's water. It's an airport. It's something that is _ you know, you hear the term recession-proof."

Unions don't like privatization deals out of fear that worker wages and benefits will be squeezed as private operators try to boost their profit by streamlining services.

Taxpayers, too, can lose out if the arrangements don't work _ and sometimes even if they do, said Mark Price, a labor economist with the Keystone Research Center in Harrisburg, Pa. Higher tolls on privatized roads can push drivers onto state-operated roads, wearing them down faster and raising public costs over time.

"You're privatizing some profits in this process and socializing some losses," Price said.

Selling or leasing public assets can produce an immediate infusion of cash for the state, while foisting the tough decisions, such as raising tolls, onto private operators instead of the politicians.

"The downsides are often after they leave office," said Phineas Baxandall, a researcher with the consumer-oriented U.S. Public Interest Research Group in Boston.

Some states struck major privatization deals well before the economic crisis hit.

Indiana, for example, brought in $3.8 billion in 2006 by leasing the Indiana Toll Road for 75 years. Chicago stands to collect $2.5 billion by leasing Midway Airport, if the federal government approves, and has raised an additional $3.5 billion since 2005 through deals for the Chicago Skyway toll road, parking ramps and parking meters.

But in September, investors walked away from a $12.8 billion bid to lease the Pennsylvania Turnpike for 75 years after legislators failed to act on the deal. And Texas lawmakers uneasy over a proposed private toll road system approved a two-year moratorium on such contracts last year.

David Fisher, who managed Minnesota's state-owned properties a few years ago under former Gov. Jesse Ventura, warned that the state has a hard time finding buyers for properties such as old mental institutions.

Fisher said some public properties belong in private hands, such as Giants Ridge Golf & Ski Resort, a top-rated getaway in Biwabik, and Ironworld, a museum and library in Chisholm. Both are owned and subsidized by Iron Range Resources, a state agency.

"Certainly those things could be privatized, I think without harm to the state, but I don't know that you could find the right buyer," Fisher said.

Comments

[ILibertine]

I have never cared for government involvement with sports parks and the like, however, caution against spinning current public assets off for short-term gain. That would seem to guarantee the wholesale abuse of such franchises as we have already witnessed by the financial establishment - gathering short-term profit at the expense of protracted well-being of the infrasstructure & etc.

In the midst of this severe crisis - or awakening, if you please - it seems as if the govenrment is every bit as culpable as the manipulative private enterprises in failing to foster a steady, long-term policy with respect to most anything. Our elected representatives have failed in momumental proportion; and perhaps we, as an electorate, have failed in demanding that accountability. Unfortunately, it seems as if the "system" is so ingrained and self-serving that it is already beyond recall. Otherwise, how come an SEC Chairman isn't in leg irons (& a few others)?

On the bright side, if this trend becomes quite the thing, we won't have to endure such quaint and silly names such as Yellowstone or Glacier Park anymore. We'll have much more interesting places to visit: Wal-Mart Fountains Park, Verizon Peaks Park, Pepsico Canyon Park, Microsoft Mountain Park and Google Glades. Yep, quite a legacy for a self-respecting nation that has already accepted the trivialization of its ball parks in this vein.

[NWBrunette]

Can we please for once in three decades stop the nonsense that the rich shouldn't pay more than a tiny fraction of their income in taxes? And help get us out of this mess, besides by buying every piece of public property? Upper income taxpayers pay a miniscule percentage of their disposable income while lower and middle income people pay a much much larger share. And social security taxes to go zero once the income is over some limit, like 125K.
Make the income tax progressive, like it used to be, and take the income lid off the social security tax. Not only will there be some fairness, they will be a lot of extra money not only to pay for a few things but to leverage that money through bonds. It might not pay for everything, but it will surely help. After eight years of the rich making out like bandits under bush, it's way past time.
Stop the nonsense that we can't raise taxes in high income earners. We can, we must and it will help the economy, not hurt. Get over listening to the same old republican nonsense.

[robeson]

Buyers ask the fed for cash.

[nootrope]

Disaster Capitalism at its finest (or worst). First create the disaster -- with excessive deregulation (mortgage lending/financial industry), with incompetence and cronyism (aftermath to katrina), with war (Iraq) -- and then allow corporate business to step in to "privatize" everything in sight so they can profit even more at everyone else's expense. Just another nail in the US coffin.

[rabiddog6708]

GOP would sell their own mommies before they would raise taxes.....­.path.etic­.

[bikerdude]

Thanx. That is both the truth and the real problem. The "have mores" have had their run at profit taking. Now its time for them to pay up, sucker.....

[jsgaetano]

This is like a NeoCon's dream come true.

Kind of amazing how they have a few trillion to bail out banks, but nothing for the states and municipalities which have daily interaction with the lives of just about every American.

I know that money given to criminals like those at Bear Sterns and other investment groups which created their own financial disaster is likely gone to never be seen again. But an investment in roads, parks, etc will not only improve life for Americans, but will have an immediate and tangible effect on local economies.

[wadenelson1]

Americans are screaming "No new taxes" and consistently vote that way.

So how are roads, sewers, bridges gonna get rebuilt if not by private industry?

How about some REBUILDING BONDS with a decent yield, like 5-10%, that AVERAGE Americans can buy in $100 increments. 100% Guaranteed by the government, and NOT SOLD to China or large investors.

[listeningpost]

Sell to who? Saudi Arabia? This isn't leadership, it's cutting and running.

[Tom95134]

What legal action can be brought to prevent States from selling the commons? Much of these were paid for using tax dollars. Does not that fact make them assets held in-trust by the State on behalf of the people? There must be some action that can be brought to force the State to put sale of the assets to a vote of the people.

[Montanagramma]

Are we all going nuts? Isn't this what the GOP has wanted us to do forever? If we fall into this trap, we are really gone as a nation. Our present financial situation is the result of all the privatization we have already done. We cannot let this happen. The devastating effects of this would be with us forever.

[Oldbuck]

This kind of selling off assets is what has us in the mess we are in this is typical of the Republican party once that surge of cash is going they have nothing to back up the income from the lottery these thing have a income coming into the the states this theory has wreck our economy and they want to compound it.. If it had not been for their mismanagement we would not be in the position we are in and they want us to trust them again you have got to be kidding.

[Nofoolhere]

The two greatest corporate induced evils that have corrupted our nation are DEREGULATION and PRIVATIZATION. How can anybody who is not themselves a greed monger look at what has been happening in this country for the past eight years and support these twin evils? These evils empower a feeding frenzy of corporate sponsored corruption at every level of government they infect. Privatization may offer short term gain, but it ensures long term pain. Its complexity boggles the public's mind. Meanwhile the politicians who are responsible for permitting it cash in and disappear.

Move and heaven and earth to do whatever it takes within your purview to educate the public and stop this ruinous trend. Read Naomi Klein's magnificent, authoritative, and scholarly book, The Shock Doctrine: the Rise of Disaster Capitalism. You will understand, to your chagrin, that what has been going on within our political and economic systems is nothing less than a determined effort by a cabal of CORPORATE RIGHT WING CONTROLLERS to fully destabilize this nation and close the loop on the slow motion coup d'etat that has been unfolding since 2000. We are experiencing deliberately induced economic shock and the FEAR it engenders to force disastrous actions like privatization, outsourcing and other wrong actions that can only amplify the destabilizing dynamics we now experience. SLEEPERS AWAKE!!

[whoknew---]

Privatization Infrastructure? I remember something about the privatization of the energy markets in California and the Enron double dealings a few years back...

Well, after that debacle I'm not a fan of selling off any kind of infrastructure to private companies. Infrastructure is one of the things that should not be in the hands of profit motivated vehicles.

It places all of us at the mercy of an entity that does not our best interests at hand unless there is a price to be paid.

[SamSeven]

The Federal RESERVE has SOLD AMERICA OUT!

The Federal Reserve is a Private Bank and owned by the Bank of London which is owned by the Rothchilds and the Rockerfellers.!!!!!

This is all planned folks to buy and gut out America from within.

END THE FED!

I would suggest you have a sit in at the FEDERAL RESERVE AND DEMAND YOUR MONEY BACK AND get back to the GOLD Standard.

[oxygen]

Whatever they do - they should never get the idea of taxing cannabis

[ajm8127]

LOL. That might actually prevent a few deaths also.