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

[marijam]

DON"T LET THEM FOOL YOU.
THIS IS JUST MORE WALL STREET B.S. WE PAID FOR THOSE ROADS, THEY DON"T OWN THEM. STOP SELLING OFF AMERICA.

I apologize for shouting but this really gets me steamed.

My husband and I traveled across country this holiday. We took two turnpikes in Oklahoma to get to Kansas. Turnpikes charge you tolls for their upkeep, right? They were in terrible shape, just as bad or worse than the non-turnpike roads. There's some corruption going on in Oklahoma, big time.

[Henk]

Sell the horses, sell the cows, sell it all, sell it Now!

[GloriaY]

Privatization? Remember Enron, the Federal Reserve, Wall Street, AIG, Lehman Bros, Bear Sterns, Madoff? That is what privatization does for us. The big guys skim off the top and fill their pockets,while the minions( the taxpayers) are stuck with the bill, is exactly what privatization does for us. It is the biggest scam on taxpayers.

[instagladiator]

You're absolutely right! But please note that the sole culprit to the mess that you are in is the second organization you noted. All else evolves/evolved from that.

I dread to think about your future, say a year from now? Everyone wants to see America prosper and regain the stature that it once held around the world. But, it looks as if "those" days are over (thanks to your Romper Room Gang) and it is very hard to plan for tomorrow.

If Obama does not take the bold steps that need to be taken, you're in for more heartaches I'm sorry to say.

[cayuse]

You cannot fool all of the people all of the time. Has anyone else heard of:

Governments selling BONDS for CASH

Corporations issuing STOCK for CASH

Who elected the SHERIFF OF NOTTINGHAM, privatizing profit, indebting the people is thiefery?

Do we have any officials that took civics, economics and business 101 out there?

[ReHoover51]

Mom, i wanna go to Klu Klux Klan Island this weekend - OK?
or worse - the Grand Mormon Canyon ...

[instagladiator]

Or, the Statue of China?

[ajm8127]

the Grand Mormon Canyon sounds scarier to me.

[ReHoover51]

they already own it ... just wait until they call in their loans ...
1, 2, 3 ... thats how the ruled the world without 1 shot fired ...

[springsm]

Yes, sell off the country to private enterprises and then what? Trouble is...foreign entities are sitting there waiting to buy up our highways. I am feeling that America as the United States of America is gone...but what will fill the vacuum. Naomi Klein's "Shock Doctrine" should be read nation wide by many. It wrenches my gut and my heart. Progressive but I don't believe in selling our infrastructure, defense methods, ports, military or anything to foreign (or even national) private entitites. Bush and Cheny, however, have nearly done what the intent was. I wonder if bush realizes which path he was led to by cheney and the other henchpeople.

[robbor]

if you really want to privatize america, bankrupt it first

[blastocyst]

First the Jobs then the Infrastructure. May as well sub-let the entire joint.
Keep those trade deficits high so they'll have enough cash on hand to consummate the deal.
Oh, and stay tuned for the minute-by-minute updates for how we're not scrambling to the Malls this season.

[cayuse]

Has anyone else heard of Government selling Bonds for cash

Of corporations issue new stock for CASH

What the hell is going on here folks?

[Blackbirdsings]

I agree Indubio, that we need a survey/study of all the costs related to every penny spent by the state government and put into a readable transparent form that all the citizens can see. Especially in MN.

Its an arduous process but it is necessary to find out where the leaking is. This is not the leadership that Pawlenty will provide. Instead he is just willfully cutting money from programs the party sees as not vital to their interests.

What I would like to see at the same time is a reorganization of state funded programs which focus on being able to educate and keep every person in the state healthy within reason. Outside of some disbursements for the disabled, unemployed and mentally handicapped, all state funds should be up for review.

Just like many families have gotten fiscally responsible as of lately, we need to expect the same of our government and know how it is our taxes work and what they are supporting. Will you have a say in where they go? the answer is no...but everyone is affected by state & government programs and until employers start paying more you have no right to control your money, besides that what is not taken already.

[CarmanK]

Selling state assets is a crime against the future of the citizens of that community. The Federal government will be looking for major infrastructure projects to make jobs in the near future. Roads, public transit, bridges, schools, dedicated state lotteries etc... belong to the people. The infrastructure is the government's responsibility. They-water, sewer, roads, bridges, public transit are necessary services and should not chanced to the private sector to do right either for the people or the security of the nation. There has been far too much privatization under the Republican laissez-faire capitalism that has already proven disastrous for the public welfare. Look at what Enron did to California and Constellation Energy has done to the utilities in MD. Competition is a joke, we got snookered. It is time the state legislators did right by the people of this nation, and stopped "selling" our national assets and security to foreign interests. Enough is Enough!! If the legislators can't do the job, then get out of the public sector and let someone else at least try.

[curiousasheck]

You can see these little rats all over and they’re all running around with little pieces of string in their teeth and and baling wire in their paws trying to pull all sorts of stuff to hold the planet’s economy together.

[mrcmdm]

Shortsighted and silly... who will ebar the brunt of this folly and how long will this fix last. This is the result of the people who liquidated the states of every meaningful source of funds yet they are the smae ones who do not belive in taxes except those that re regressive in nature... Here's to the newest banana republic the grand old US of A. This happening brought to you by the republicans and all of the good christians who are anti-abortion, anti-gay, anti-people and pro-poverty.

[plages]

Ah yes, its exactly what the rnc wanted, destroy everything, and those wanting to privatize America, will own everything, however, with no middle class, who will or can buy anything or travel on their toll roads, or do they care? We're not at the bottom yet!

[instagladiator]

But, you're free-falling at lightning speed.

[libmatters]

Isn't this the "ownership society" Bush was talking about?
A monumental transfer of wealth upward. Lots of suckers to pay the tolls which can be raised to stratospheric levels at the whim of the owner. And whatever money is raised on the sale is pissed away by mayors and governors. It's not just Republicans doing it anymore. Mayor Daley is selling off pieces of the city to pay the bills. Midway airport, parking meters, the Chicago Skyway.
First sell influence to the highest bidder, then sell off the public's property.
It's Grover Norquist's dream. User fees and a profit motive for everything.