Brewer wants to sell state buildings to balance budget

By Howard Fischer
Capitol Media Services
Published/Last Modified on Tuesday, March 3, 2009 3:34 PM MST


GLENDALE  Gov. Jan Brewer wants to look at selling off state buildings as a way to balance next year’s budget.


The governor, in a speech Thursday to West Valley elected and business officials, said the state needs to find ways to use the assets it has as it faces a big gap next year between anticipated revenues and expenses.

That deficit is going to be even larger than the $1.6 billion one lawmakers just solved with a combination of budget cuts, fund sweeps and stimulus dollars: Legislative budget staffers have put the red ink for the coming year in the $2.4 billion range; gubernatorial press aide Paul Senseman said it could be “north of $3 billion.’’

Brewer’s desire to come up with alternatives to trimming state budgets even further comes as various groups are protesting the cuts already made.

On Thursday, hundreds of individuals who get services for the developmentally disabled descended on the Capitol to protest $100 million in cuts to the Department of Economic Security. That includes nearly $10 million in cuts for programs specifically aimed at these people or their children.

Two days earlier, protestors from AARP were objecting to cuts to programs for independent living.

And various education groups have had repeated rallies at the Capitol following $133 million in cuts to K12 schools and $150 million taken from community colleges and universities.

Brewer has said for weeks, since taking office, that “all options’’ have to be on the table to balance the budget. This is the first time, though, the governor has publicly broached the idea of actually selling off assets.

Brewer provided no specifics to her audience at the Glendale Civic Center. But Senseman said the main thing the governor has in mind essentially amounts to mortgaging state buildings, selling them to private investors and then leasing them back over some fixed period until they are once again owned by the state.

Under that plan, the state gets up front money. But the tradeoff is that investors would want a return on their money, meaning that the amount eventually paid off would be much more than the cash payment.

Senseman said the list of buildings could include everything from offices on the Capitol Mall to state prisons.

He acknowledged that Brewer has repeatedly said she does not want to use “gimmicks’’ and onetime cashgenerating solutions to deal with the budget. He said the idea of a saleleaseback probably falls into that category.

“But it needs to be something that’s considered,’’ he said.

Senate Majority Leader Chuck Gray, RMesa, agreed.

“We’ve got to cover $3 billion in a way that doesn’t burden our businesses and homeowners with additional taxes,’’ he said.

“So we’ve got to look outside the box on how to get that done and stay solvent,’’ Gray continued. “Otherwise, government shuts down.’’

There is another option: Sell some buildings outright. Senseman said the cuts already made in state spending  and the employees already let go  may actually leave the state with more space than it needs.

House Majority Whip Andy Tobin, RPaulden, said that may be the better way to go. In fact, he said, the current economic conditions may actually provide an opportunity to shed the state of some of its older buildings, especially those which are now only partially occupied and have high utility bills.

Eventually, Tobin said, the state could replace those buildings with newer, more efficient ones.

“Of course, this is the worst time to sell real estate,’’ Tobin acknowledged.

Senseman said the governor is pulling together a list of what buildings could be sold off, with or without the option of leasing them back.

Some buildings already are off the table simply because they are, technically speaking, not yet owned by the state. For example, the new state health laboratory was built with certificates of participation, with investors financing the construction and holding title while the state makes payments.

 

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