States consider selling off roads, parks to close gaps
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 Governor 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 Governor 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.
"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.
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.