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C’mon Down for Great Deals on Government December 17, 2009 It’s not a “going out of business” sale, but it’s a start. As part of the budget deal reached by the governor and legislators earlier this year, Connecticut is planning to privatize $60 million in state assets. Contrary to the lazy propaganda of government-employee unions, “privatization” is not the contracting out of public-sector services, a process accurately described as “competitive tendering” or “contestability.” Rather, it’s the complete transfer of government possessions to the private sector. Margaret Thatcher was a privatization hero -- the UK prime minister sold British Telecom, seven major airports, and a million units of government housing. In all, $40 billion in state holdings were unloaded during the Iron Lady’s watch. Many nations, in Asia, Europe, and South America, followed Thatcher’s lead. In America, privatization efforts haven’t been so successful. Due to the power of government unions and their forced-dues-funded political machine, it’s one of the toughest reforms taxpayer-friendly policymakers can enact. The Gipper’s attempts at privatization fizzled. Reagan budget guru James Miller drafted a selloff list that included the Bonneville Power Administration, Tennessee Valley Authority, Federal Housing Administration, and U.S. Postal Service. For the most part, the statist quo prevailed. The administration’s only noteworthy success came in 1987, with the sale of Conrail. At the time, it was the largest stock offering in history, returning $1.9 billion to the federal treasury. At the state and local levels, the story isn’t much different. Pols and bureaucrats are loath to surrender control of facilities government should never have built or acquired in the first place -- e.g., airports, electric and gas utilities, and parking lots/garages. But the political class’s resistance has run into the reality of the Great Recession. As a result, in recent months Arnold Schwarzenegger has suggested selling the Los Angeles Coliseum, San Quentin State Prison, and the Orange County Fairgrounds. Arizona began to explore sale-leaseback arrangements for several of its prisons, and perhaps the Grand Canyon State’s capitol buildings. And the Missouri Department of Transportation took bids on 23 “highly marketable” parcels of land. For Big Government cultists, it’s a worrisome trend. Last month, Jon Shure, deputy director of the far-left Center on Budget and Policy Priorities, huffed to www.stateline.org that privatization is a “a short-term, one-time fix that avoids the difficult decisions of having to find revenue. Public buildings should belong to the public. When you sell or lease them, you’ve given up a piece of real estate that at least symbolically should belong to the public. It says a lot about the desperation the states feel, but desperation is clouding long-term judgment.” Actually, if states hadn’t blown so much pre-recession revenue on needless spending, their fiscal meltdowns wouldn’t be so severe. But regardless of who’s to blame, gaping budget deficits have provided an opportunity to assess the stuff government ought not possess. According to the Office of Policy and Management, the State of Connecticut has more than 3,700 structures, containing a total of 60.2 million square feet of space. It also “owns” more than 260,000 acres -- 8.1 percent of all land in the state. It’s difficult to believe that all that property is used for “essential” services. That’s why GOP members of the House of Representatives suggested privatization as a deficit-cutting tool. Amazingly, their proposal survived the summer budget standoff between Governor M. Jodi Rell and Democratic legislative leaders. Connecticut is now peddling both acreage and buildings. The Seaside Regional Center in Waterford, former Nathan Hale Hotel in Willimantic, old Litchfield jail, and Bristol Armory are for sale, as are dozens of empty lots. (For a full list, visit www.ct-surplus-property.com.) Unfortunately, the state’s quasi-public agencies are not yet on the auction block. Also known as “authorities” and “government-sponsored enterprises” -- at the federal level, think Fannie Mae and Freddie Mac -- these dodgy entities regularly combine the lack of accountability of the public sector with the oft-irrational exuberance of profit seekers. The Connecticut Resources Recovery Authority, Connecticut Development Authority, and Connecticut Innovations (a venture-capital fund) are embarrassments. But they might be attractive to investors who know what they’re doing. Bradley International Airport is another overlooked enterprise -- it could fetch hundreds of millions of dollars. Capped at $60 million, Connecticut’s privatization plan can’t be considered ambitious. But the sales will set a precedent that the state is capable of ridding itself of assets that properly belong in the private sector. With town, city, and state governments facing red ink for many fiscal years to come, the era of privatization might have, at last, begun. Even in Connecticut. D. Dowd Muska is a writer, commentator and lecturer. His website is www.dowdmuska.com. # # # # #
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