Privatizing the Way Out of Shortfalls
In The New York Post, Leonard Gilroy, the director of government reform at Reason Foundation, the nonprofit that publishes reason online, tallies up savings from a recent string of privatizations done by Chicago (yeah, that Chicago):
Mayor Richard Daley has learned how effective partnering with the private sector can be:
* In 2005, he leased a 7.8-mile stretch of toll road for $1.8 billion. The private company operates and maintains the road, earning its money back through tolls. The city used the upfront cash to pay down debt and establish a $500 mil- lion rainy-day fund.
* Daley also didn't see why the city was in the parking-garage business. So he leased four downtown parking garages, bringing taxpayers $563 million.
* Most recently, he announced the lease of Chicago's Midway Airport to a private company for $2.5 billion.
All these moves have raised the city's credit rating, lowered its borrowing costs and shored up pension funds.
Addressing New York's massive deficit, Gilroy argues that
the Empire State has $70 billion in transportation projects waiting for funding. Two years ago, it identified several potential public-private partnership projects that would help eliminate the backlog—including expansion projects for the Staten Island Expressway, Van Wyck Expressway, I-84 and other major highways….
Any windfall needs to deliver lasting value for taxpayers. Leasing valuable assets and then diverting the cash to cover operating shortfalls in other parts of the budget may be a tempting Band-Aid but is terrible fiscal policy.
Not to drift into "disaster capitalism" or anything, but one possible upside of budget crunches can be that governments get out of businesses they don't need to be in in the first place.