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.

Story continues below

advertisement

"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

[LeftLeaner]

They have no right to sell "OUR" infrastrure.

That's what we pay taxes for. It's "OUR" infrastructure - that is ILLEGAL!!!­!!!!!!!!!!­!

[instagladiator]

Aww chill out! It's just The New World Order moving into another phase.

[DMcD]

Oh ,what a great idea this is --- and when the profits from these one time sales are squandered-away (which shouldn't take long at all) ; what then ?? These former income producing assets are , no longer. To my mind , living in California where BS like this has been going on for some time now , these assets (like beaches, parks and roads that we've already paid for, in spades) are "not theirs to sell". They belong to "all of us". I say that if they're that bad off , file for chapter 11 re-organization and get it over with --- and keeping in mind that they can't sell what isn't theirs to sell.

[INTUITE]

Maybe if they didn't think taxes was a four letter word, this never would have happened. There are no free lunches...fire dept, police, libraries, infrastructure, etc. etc. We have to stop living on credit, individuals, cities, states and fed. govt.

[oncesung]

Read Naomi Klein's book Shock Doctrine. This was the plan all along. Bankrupt the country so that every park, public utility, road and rock has to be sold to raise funds for the public welfare.

[Alvarask]

True. The plan has been to steal the wealth of the entire world and it is happening right under our very noses.

[zaz33]

I agree oncesung - It's also called neo iberal economics in third world countries.

I think we may qualify.

[LeftLeaner]

As the working class American individual is forced to pay for his/her share of taxes in addition to supporting the "FREE" social services for the millions of illegals in this country, our tax base in being destroyed, thus, resulting in these wild approached to raising money.

They "CAN'T" sell the infrastructure because that would be illegal, as "WE" the American Taxpayer owns its infrastructure.

Wake up America, and get your head out from under a rock, and learn what is going on in your own country.

[hortonhearsawho2]

the blame game...

[LeftLeaner]

No, it's called reality

[JohnnyL]

But those are hardworking people doing jobs that Americans aren't doing. That's what George Bush told me. It used to be "won't do" but now it's "aren't doing."

[cayuse]

It is like we have never heard of issueing new stock or selling a bond. As we did for over 200 years.

Then there is Payroll and Income taxes for workers and NO TAX for living off the family wealth. Tax free bonds, 15% capital gains. Drink more beer, kill another deer.

[Indubio]

Regretfully, this approach is the wrong one to consider. If the past couple of decades have demonstrated anything it is that the private sector is no more competent and decidely more corrupt than the public sector. Reducing costs is a good idea whenever that's possible (I'd suggest begining with constitutional ofoficers and legislators and staff) but the bottom line: Americans have been sold the notion they can have public services for free! There are no costs for public services beyond the taxes we pay. We can keep adding/expanding services without increasing taxes. Public servants should work for free and for no benefits, and, the public has no responsibility to pay a fair price for public services (you see no price is fair because such services should be free). Scumbags like Pawlenty believe the only services government should provide are public safety. So yes, lets lock up more people to protect us from criminals or people who might become criminals and then let's increase police and prison budgets to deal with the overflow. American society must conduct a bottom to top study of public services across the country to determine what the public continues to want. The costs for supporting what the public desires must be reasonably estimated.

[escobar]

The plan to privitize things is the most destructive thing they can do.

[sandiaview]

This is the kind of short sighted thinking that has gotten us into this mess.

[sunshinerain]

Here's how it was in Detroit recently - Mayor Kwame Kilpatrick settled a lawsuit against the city, for $8 million dollars - when the cops' lawyers let the mayor know they had evidence of Mayor's affair with his chief of staff Christine Beatty - THEN Kilpatrick turns around and wants to sell city parks etc to make up budget deficit. Hey, what about that $8 million?

So know Kilpatrick and Beatty are gone.

[partyofone]

Corporate ownership, greed and profiteering for short-term with no long term responsibility. lack of ethics, is what got the nation into this mess. The LAST thing states should do is give corporations more control.

[LiarLiarIraqsOnFire]

In 2006 Indiana leased it's portion of I-80 to a foreign held consortium for 75 years... three years later the toll road is in disrepair, tolls have increased, wages have been cut along with jobs and the money is almost gone. Heckuva a job Mitchie!

[LeftLeaner]

Foreign held consortium - you know what that means - ROGUE countries buying up our infrastructure which is NOT for sale as it belongs to the American public who pays taxes for the purpose of using "THEIR" services!!!!!

[CintiBlue]

I met an Indiana woman just after this lease went through. She was mad, but I sensed she didn't understand how this would play out. I had my tin foil hat on and was very suspicious that anything positive would be gained by handing over control of roads that used to have large signs announcing "Your Tax Dollars At Work".

Sorry to hear my negative outlook has come to pass. I imagine roads will fall like dominoes across the country. Bad thing to do.

[LiarLiarIraqsOnFire]

To add insult to ineptitude the Gov. used the $$$ from the sale/lease of the toll road in the north to do road work in central & southern Indiana (where non-union companies usually locate with the help of state subsidies that come from my tax $$$). That's probably because the folks down in Indy believe that anything north of Kokomo is southern Michigan and therefore not their concern.

[loki]

Fantastic, sell the only things of substance you have, to those who created this mess we are in. Wow, Id expect nothing less from politicians who seldom have an iq over 4.

[TJCole]

Maybe Minnesota would have been in better shape without a Republican as their U.S. Senator...

[Perry Clease]

That would apply to the all the States, even the "Upper 1."