States facing budget deficits are considering selling off or leasing some assets to raise cash (via USA Today):
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.
During the fat years when they were rolling in tax revenue, the states spent like drunken sailors. Now with tax revenue falling, they will either have to sell assets, raise taxes or layoff employees. Raising taxes and laying off employees are political non starters so selling assets is the best political alternative. Whether its the best long term option is a tougher question. If a state leases a toll road to a private company, will they have to get state approval to raise tolls? That doesn’t seem like an arrangement that a private company would agree to. It would seem to be self regulating though; if tolls are raised too much, traffic will drop. The Laffer curve works in the private sector too.
There are some privatizations that I wouldn’t mind though. Here in Miami, the airport has been a source of embarrasment and political corruption for years. Surely the private sector couldn’t do a worse job than our local politicians.