California’s budget crisis is remarkable for the sheer magnitude of its deficit. New Jersey’s and New York’s revenue streams are entwined with the decimated financial markets. Florida experienced the worst of the housing market collapse.
And Arizona faces its own catastrophe. Its budget shortfall, while at $3.4 billion not as large as California’s, represents 30 percent of its $10.7 billion budget.
After months of wrangling over how to meet the shortfall — program cuts versus tax cuts — a possible solution was reached this week, four weeks into the state’s new fiscal year: the lease of 32 government-owned properties including the State House, a prison, and a state hospital.
The plan involves selling the properties for a quick infusion of cash, and their leaseback over a period of years.
This is the plan’s second go-round. Governor Brewer vetoed it last month. But the state has few options left. Arizona has a constitutional debt limit of $350,000. Under the deal, the state would also have the option of walking away from the lease payments — effectively turning over some of the buildings to the private sector.
Lamentations over the leasebacks are misplaced. Unlike other states — California is “borrowing” money from its cities, New Jersey secured a line of credit from J.P. Morgan to pay its debts — Arizona is taking a step in the right direction.
In fact, looking at the proposed list, it’s not clear why several of the properties aren’t just sold outright.
With a price tag of $84.3 million, privatization is a win-win situation. Take a non-essential, non-public good off the state’s books, and it has a chance of becoming a profitable (i.e., job-creating) business for a willing investor.
The Arizona Exposition and State Fair’s executive director sees it differently. He writes that the fair is 100 percent self-supporting, and receives no money from the General Fund but, that proposed budget cuts of $2.7 million will mean the Fair will “cease to exist.”
Sounds familiar. Last month, the New England Zoo made even more serious threats when faced with budget cuts: keep our funding, or we’ll have to euthanize these animals.
Maybe under a private owner, the fair will find there’s a lot more it can do before shutting down “one of the most popular all-Indian Rodeos in the Southwest.”