Cash-strapped states weigh selling roads, parks

By MARTIGA LOHN, Associated Press Writer Martiga Lohn, Associated Press Writer
Sat Dec 27, 3:39 pm ET

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 Gov. 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 Gov. 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.

Taxpayers, too, can lose out if the arrangements don't work — and sometimes even if they do, said Mark Price, a labor economist with the Keystone Research Center in Harrisburg, Pa. Higher tolls on privatized roads can push drivers onto state-operated roads, wearing them down faster and raising public costs over time.

"You're privatizing some profits in this process and socializing some losses," Price said.

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.

"The downsides are often after they leave office," said Phineas Baxandall, a researcher with the consumer-oriented U.S. Public Interest Research Group in Boston.

Some states struck major privatization deals well before the economic crisis hit.

Indiana, for example, brought in $3.8 billion in 2006 by leasing the Indiana Toll Road for 75 years. Chicago stands to collect $2.5 billion by leasing Midway Airport, if the federal government approves, and has raised an additional $3.5 billion since 2005 through deals for the Chicago Skyway toll road, parking ramps and parking meters.

But in September, investors walked away from a $12.8 billion bid to lease the Pennsylvania Turnpike for 75 years after legislators failed to act on the deal. And Texas lawmakers uneasy over a proposed private toll road system approved a two-year moratorium on such contracts last year.

David Fisher, who managed Minnesota's state-owned properties a few years ago under former Gov. Jesse Ventura, warned that the state has a hard time finding buyers for properties such as old mental institutions.

Fisher said some public properties belong in private hands, such as Giants Ridge Golf & Ski Resort, a top-rated getaway in Biwabik, and Ironworld, a museum and library in Chisholm. Both are owned and subsidized by Iron Range Resources, a state agency.

"Certainly those things could be privatized, I think without harm to the state, but I don't know that you could find the right buyer," Fisher said.

Will the U.S. Break Up?

George Washington’s Blog
December 25, 2008
The larger and more complex a system, the more likely it is to break down. Something like a simple pendulum with few moving parts could last many years. But very large, complicated things like the Large Hadron Collider break down much more quickly.
America now has some 300 million people, 50 states, and more federal, state and local agencies than anyone can possibly list. It is hard to govern such a large, complex and populous system when anything goes seriously wrong.
And a lot is going wrong right now.
The U.S. military agrees that the chance of a break down in the system is real:
A new report from the U.S. Army War College [here is the report] discusses the use of American troops to quell civil unrest brought about by a worsening economic crisis.
The report from the War College’s Strategic Studies Institute warns that the U.S. military must prepare for a “violent, strategic dislocation inside the United States” that could be provoked by “unforeseen economic collapse” or “loss of functioning political and legal order.” [The report also warns of a possible "rapid dissolution of public order in all or significant parts of the US."]
International Monetary Fund Managing Director Dominique Strauss-Kahn warned last week of riots and unrest in global markets if the ongoing financial crisis is not addressed and lower-income households are beset with credit constraints and rising unemployment, the Phoenix Business Journal reported.
Sen. James Inhofe of Oklahoma and Rep. Brad Sherman of California disclosed that Treasury Secretary Henry Paulson discussed a worst-case scenario as he pushed the Wall Street bailout in September, and said that scenario might even require a declaration of martial law.***
The Defense Department has made plans to deploy 20,000 troops nationwide by 2011 to help state and local officials respond to emergencies.
In other words, the government is predicting that systems will break down. But instead of doing anything to actually fix the underlying problems which are leading to the break down (like making sure that politicians follow the Constitution and making sure that America’s manufacturing base is rebuilt, so that we can make something real, and our workers can make decent wages on a sustainable basis), the government is just planning on implementing police state measures to quell protests.
(Indeed, while most Americans don’t realize it, this already started happening years ago).
Will that help keep the U.S. together?
Maybe in the short-run. But I believe that - especially now that the illusions that we’re in an endless boom economy and that the U.S. is a true democracy following the wishes of its people have started to pop (see this and this) - within the next decade, America will break up, like the Soviet Union.
Note 1: One precipitating factor in the break up of the U.S. may be the bankruptcy of the states. California, Connecticut, Florida, Hawaii, Illinois, Massachusetts, Michigan, Nevada, New Jersey, Ohio and Wisconsin are all in really big trouble, and on the verge of defaulting. The rest of the states won’t be that far behind as the financial crisis intensifies. If the federal government isn’t helping them in their most dire crises since the founding of the country, and if the feds impose the heavy hand of martial law without any benefit to the states, they will have less incentive to remain a part of the union.
Note 2: What would the break up of America mean for the dollar and for gold? It would likely be very bad for the former and very good for the latter. But remember, the U.S. might not break up for some time.

Utah Guest worker program proposed

By Arthur Raymond Deseret News Published: December 4, 2008
As Utah's pending immigration legislation continues to take fire from business leaders and other government agencies, the Salt Lake Chamber of Commerce came forward Wednesday at a Capitol legislative meeting and pitched a guest worker program it describes as a "tool to improve the Utah economy."
The plan, presented by Wesley Smith, the chamber's director of public policy, was crafted by chamber president and former Senate President Lane Beattie. Smith said the plan outlines a fundamental shift of the oft-criticized financial liabilities of undocumented workers from taxpayers to the workers themselves and their employers.

"The idea behind the guest worker program is, in most if not all respects, to take the (financial) burden from the public and put it in the private sector," Smith said. "That financial burden will be borne by the guest worker and the guest worker's employer."

The program proposes to create a two-year, renewable guest worker authorization for foreign workers and undocumented immigrants who are currently residing in the state of Utah. Workers would be required to register with a governing body, tentatively identified as the Utah Department of Workforce Services, and successfully pass both a security check (any felony convictions or serious offenses automatically would exclude the applicant from the program), and a medical screening. Further requirements would include the posting of a surety bond that would be forfeited if the guest-worker terms were not met, a 10 percent payroll withholding that would be held in trust until completion of the contract, and requisite health and auto insurance.

Smith said a key obstacle to overcome are federal regulations that would inhibit some provisions of the program, although the chamber had worked with Utah members of Congress, who supported it and would help with waivers. Those federal exceptions would give Utah the right to issue temporary work permits to undocumented persons, to engage in aggressive enforcement of federal and state immigration law and to funnel FICA and Medicare payroll withholdings back to the state to cover health insurance and cover administrative costs.

An outline of the plan Smith distributed to lawmakers said the enhanced law enforcement efforts would be necessary to stem a possible "large influx of undocumented workers who may be attracted to Utah's new program."

Smith contends the residency requirement of the worker permits, in addition to stepped-up enforcement, would somewhat limit this influx. Plus the very nature of the worker permit offer would provide a de facto screening process among undocumented residents.

"The incentive is strong enforcement of immigration law," Smith said. "If you don't register, we assume that you're not registering for a reason ... because you have something to hide and aren't willing to contribute to the state in the way we expect."

Smith said it is the chamber's contention that the preponderance of undocumented workers in the state are already contributing to their communities and this proposal creates an avenue for a new level of engagement.

"It would allow the majority of the people that are here to come forward, to work with us and become part of the community," Smith said.

Sen. Mark Madsen, R-Lehi, questioned how many of the current undocumented workers living in Utah could pass the security screening and how effective that screening process would be.

"How are you going to find enough people who have not engaged in use of fraudulent documents or identity theft," Madsen said. "I get the impression that there is room in this program for those who have committed crimes."

Smith's program outline indicates applicants to the program would be processed through the Interagency Border Inspection System Name Check system, administered by the U.S. Customs and Immigration Service and, if further review is merited, screened for criminal offenses by the FBI.

Sen. Ross Romero, D-Salt Lake, said he took Smith's presentation as a positive alternative viewpoint on the immigration issue and characterized SB81 as an ongoing "work in progress" that could undergo further changes and modifications before its scheduled implementation on July 1, 2009. He noted that President-elect Barack Obama's appointment of Arizona Governor Janet Napolitano to head the Department of Homeland Security could set a new tone at the federal level on immigration issues. A lack of action by the federal government, Romero said, has put individual states, including Utah, in a position of having to create state-level solutions to problems not being addressed in Washington.

In 2006, Napolitano and Governor Jon Huntsman, Jr. crafted a guest worker proposal that successfully passed the Western Governors' Association. Arizona is widely considered to have some of the toughest immigration statutes in the country.


Provisions of Guest Worker Proposal

• Register as Worker

Applicants must register all relevant contact data including name, address, telephone number, etc. to the state. Data must be updated if any changes are made. Failure to update is grounds for revocation of worker status.

• Security Check

Each applicant is fingerprinted and their name run through Interagency Border Inspection System. A criminal history that includes any felony or serious offense results in ineligibility. Further review, if necessary, conducted by FBI.

• Medical Exam/Health Check

Each applicant required to undergo same examination currently required for federal residence status. Utah will apply same health-related ground for inadmissibility.

• Employer Sponsor

Employer can only sponsor an applicant if the position to be filled has been subject to appropriate notice and no eligible domestic workers have been identified for the position. Applicants who are not Utah residents must apply from their country of origin. Applicant must be sponsored within 90 days of registering as a worker.

• Surety Bond

Applicant must provide a minimum security bond with the intent of covering any cost of future enforcement if applicant does not honor terms of guest worker program.

• FICA and Medicare Equivalent Withholding

State of Utah will require employers to withhold an amount equivalent to typical FICA and Medicare withholdings (currently, about 15 percent.) Money will pay for health care and administrative costs of program.

• 10% Additional Withholding

This withholding will be taken out by the state and held in trust until the successful completion of the applicants guest worker status. Applicant is eligible for principle, while interest goes toward administrative costs.

• Health Insurance

All guest workers must be enrolled in a health insurance program. Employers may facilitate this requirement by providing employee insurance.

• Auto Insurance

Proof of valid auto insurance will be submitted to Department of Workforce Services. Expired insurance grounds for revocation of guest worker status. Waiver provided for non-drivers.