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Wednesday, May 29, 2013

State Capitol Could Be Sold Without a Public Bid

Walker follows tea party governors’ lead in filling budget holes with property sales

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“We’re going to be checking Craigslist very closely,” said Senate Minority Leader Chris Larson (D-Milwaukee) of the Republican-backed plan to allow Gov. Scott Walker to sell or lease state properties without a public bidding process.

Larson was only half-joking about Walker’s plan to sell—via no-bid contracts—publicly owned assets such the governor’s residence, Camp Randall stadium, campus dorms, prisons, power plants, highways and office buildings.

Even Wisconsin’s iconic state Capitol could be sold without a bid to a private corporation.

“It’s possible,” Larson said.

The Joint Finance Committee (JFC), made up of 12 Republicans and four Democrats, tweaked Walker’s proposal by requiring that committee to sign off on all deals and exempting some properties from being sold, such as those that were primarily funded by private donors or the federal government.

And while the Walker administration would have to provide some financial details about any deal, it could sell off state properties without soliciting public bids.

State Sen. Fred Risser (D-Madison), a longtime member of the State Building Commission, said the proposal “defies logic” and that he doesn’t consider JFC approval to be adequate public oversight.

 

Arizona Wants To Buy Back the Capitol It Sold

Walker’s not the only tea party governor who’s trying to fill budget holes with proceeds from state property sales and leases instead of raising taxes on the wealthy.

In 2009, Arizona Gov. Jan Brewer presided over the sale of that state’s capitol complex to a private real estate company in a deal that Tim Murphy in Mother Jones called “the greatest drunken eBay transaction of all time, except in this case there was no booze involved.”

Arizona sold its capitol complex for $81 million and makes lease payments to a real estate company. Brewer announced earlier this year that she wants to buy back the statehouse buildings for $105 million.

Other states have privatized assets with similarly mixed results.

In 2006, Indiana Gov. Mitch Daniels sold a 75-year, $3.8 billion lease for that state’s toll roads to a private Spanish-Australian partnership, ITR Concession Co. The state still owns the roads, but ITR receives the toll revenue and pays for maintenance. The company can raise tolls within a certain limit until 2016, when the limits will be loosened and experts predict the company will hike tolls so it can generate a greater profit.

John Gilmour, a professor at the College of William and Mary, told the Associated Press that the deal allowed Indiana politicians to raise money without raising taxes or incurring debt, “but it offers little to those who will live in Indiana in future decades.”

Ryan Holeywell, writing for Governing in 2011, said the Indiana project’s investors were “suffering under the expense of the deal,” and were struggling to make debt payments.

He warned that investors in future public-private partnerships would be more wary about buying or leasing state-owned properties.

“Investors are likely to notice that a project that, at one time, was the poster child for public-private partnerships now looks more like a dubious deal,” Holeywell wrote.

Last December, Ohio Gov. John Kasich formally announced that the state would not pursue his proposal to sell or lease the Ohio Turnpike to a private operator and instead plans to issue bonds backed by future toll revenues. The tea party governor had faced criticism that a private corporation would spike tolls so high that drivers would use local roads instead.

 

‘Trust Us’

Walker himself is no stranger to privatization of public assets. As Milwaukee County executive, he had proposed privatizing Mitchell International Airport in 2008 but supervisors blocked him. Two years earlier, Republican legislators had tried to spin off the airport into a public-private airport authority, but didn’t back full privatization. That proposal died amid much public criticism.

Walker also privatized some other county services, including courthouse security, but a judge deemed his contract with G4S Wackenhut was illegal and forced the county to re-hire its original guards. County taxpayers were on the hook for Walker’s bills.

Larson, like his fellow Democrats, is concerned that the Republicans’ no-bid plan opens the door to corrupt deals that will harm the state’s best interests. No homeowner would do a major renovation on their home without getting competitive bids, nor would any corporation make a major purchase without competitive bids. No-bid deals will inevitably lead to corruption.

“Especially in this day of post-Citizens United and the propensity to do anything for a campaign buck by this governor, I think it’s extremely worrisome to put all of our state assets that aren’t banned by federal law on the auction block,” Larson said. “With the only limit being ‘trust us.’ There will be a touch of legislative oversight but not enough to spoil a good fire sale.”

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