by Pamela Prah
Want to buy the Brooklyn Bridge? It’s not for sale yet, but the Indiana Toll Road and the Pocahontas Parkway outside Richmond, Va., recently were leased to the highest bidders. And if Texas Gov. Rick Perry prevails, private firms will pay the Lone Star State $1.2 billion for the right to build a $6 billion toll road from San Antonio to Dallas.
It’s the latest twist in creative ways of generating revenues without raising taxes. States have taken to selling off, leasing out and cashing in on some of their most valuable assets, primarily toll roads.
Several big deals were consummated in 2006, even as a resurgent economy and the return of surpluses gave most states a respite from penny-pinching. Another form of easy money — tax revenues from legalized gambling — also is helping to keep state coffers brimming. And states, like credit card-crazed shoppers, are borrowing more money than ever through the bond markets.
The prize of cash upfront is what’s driving the new phenomenon of states marketing public assets to private corporations.
“Policy-makers are asking themselves, ‘What assets can we lease?’” said Arturo Pérez, a fiscal expert at the National Conference of State Legislatures. “A lot of creative minds are out there working on that.”
Govs. Rod Blagojevich (D) of Illinois and Matt Blunt (R) of Missouri are looking into auctioning off student loan portfolios. Blagojevich, who won re-election in November, also is renewing a push to lease the state lottery for $10 billion, promising the money will be spent on schools.
Indiana’s $3.8 billion deal for a 75-year lease on its toll road made other states take notice. The arrangement with a private Australian-Spanish consortium gives the state a way to pay for $3 billion in transportation upgrades across Indiana over the next 10 years. The companies also agreed to make $400 million in repairs to the 157-mile toll road, which runs across northern Indiana from Illinois to Ohio. Plus, the state will net $700 million to $900 million in interest on the $3.8 billion lump-sum payment.
