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Arizona Considers Selling Capitol Buildings
Things are so bad in Arizona that legislators are considering selling the House and Senate buildings where they've met and worked for more than 50 years. Dozens of other state properties may also be sold. The plan is to sell the properties and then lease them back over several years before assuming ownership again. "We've mortgaged the legislative halls," said an exasperated state Rep. Steve Yarbrough, a Chandler Republican. "That just tells you how extraordinary the times are. To me, it's something we're going to have to do no matter how much we find it undesirable." I bet they could get a great price on the Grand Canyon.
Low taxes can have high costs.
Arizona's actual long-term plan is to sell all of their Capitol buildings and replace them with Lowercase buildings and pocketing the difference in caost.
Is this like monopoly? I tend to lose not long after I have to start mortgaging my properties to the bank.
#fuckbeta #iamslashdot #dicemustdie
You don't live in Arizona do you? They've already cut everything they can. There's constitutional restrictions on what they can touch (direct voter mandates cannot be cut) and there's a lot of essentials that cutting will cripple the future of the state if they're cut any farther than they already have been (Education being the most commonly talked about one).
They're out of things to cut and any attempt to raise taxes has been shot out of the water by the legislature. The final compromise sends the tax hike to the voters so the legislature doesn't get their political hands dirty with it.
Should they have saved during the boom more than they did? Yes. Did Arizona save a lot during the boom? Actually yes it did but all of that savings only covered last year's deficit. Now savings is depleted and current tax revenues have fallen by double digit percentages but the population hasn't fallen by much (most areas are actually still growing) so basic services that the government is responsible for still need to be covered.
As is a lot of the state parks are now shut down because there's no money to pay for them. So don't knock the government here for doing everything in their power to fix the problem. At least we haven't had to send out IOU's like California yet.
On a per capita basis, Arizona is worse off than California. The cause is due to a confluence of factors, including not saving enough for the bad times, taxes being too low or spending being too high, having such a growth oriented economy, etc.
But there are two items which I am CONVINCED are major factors as well.
1) Term limits: They suck. I used to support them, but I was wrong. Term limits result in a legislature that doesn't know WTF it's doing at any time. There is no institutional memory, and once someone understands the complex process of creating and passing legislation - they get the boot. Additionally, because no one exactly knows their jobs, term limits result in a weak branch of government, so the executive tends to dominate. This is not what our respective state constitutions intended. I wish people would put two and two together on this.
2) Illegal alien "crackdown" and employer sanctions: AZ is suffering a major real estate crisis. The crisis is for reasons obvious to anyone, but a contributing factor for our crappy economy and crappy real estate was the crack down on illegal aliens. Folks don't realize that these people rent and spend here too (often times without the societal expense us "real people" tend to cause society). When you have sweeps, a lack of employment and a general sense of animosity towards those who (in my view) are major contributors to society, they move one state over (they're not moving back to Mexico). I wish people would understand this point too.
Certainly, the overall economic factors play a very large role, but AZ has gotten itself in a big mess all by itself...
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So what if I buy one of these properties then break the tenants lease (pay a financial penalty or something) then I'd outright own the property? Would the building be zoned commercial or could I make one of these buildings into my house? or bed & breakfast? (which would great if I bought a jail)
Just thinking outside the box here...
So I take it you've analysed Arizona's budget and know for a fact that excessive government spending is a problem? I'd be interested in hearing your analysis of precisely what should be cut.
There's a difference between patriotism and theft.
Look at the budget for the State of Arizona...for 2000, it was 27 billion, for 2009, it is 55 billion...
http://sunshinereview.org/index.php/Arizona_state_budget
Gov't spending is up 8% annually. Where the hell is the money going? Why do you want to raise taxes to double their current levels when people's paychecks have not gone up. Cut services... the state spending is out of control.
This is my sig.
Im confused here... If they sell the buildings then lease them from the new owners do they not have to pay rent? Then in a few years when the economy is better wont they have to buy it back for more then they sold it for? Real estate generally increases in value not decreases. It would make the whole deal a loss for the state then wouldnt it? I see no way that this would help out with their yearly budget except for the year they sell it. After that its only going to be a net loss.
It seems to me this sounds like a bs accounting scheme. Kinda similiar how a few states say its cheaper to keep a murderer in prison for life then it is to execute him within a few years. Its looks great in the short term but in the long run it costs much more.
It just sounds really stupid to me. I can understand trying to get some money to make ends meet but this whole deal makes me scratch my head.
The economy is in poor shape now, but will probably get much, much worse in the coming years (see today's poorly performing 5 year treasury bond sales, an indicator that foreign banks and investors don't want to invest in us, even with a higher "tail" interest rates.). What makes our state legislators think that they will have more funds in a few years to buy these properties back?
It is in no one's interest that the US economy crash and burn, and that is why the oil rich countries, and China, Russia, etc. appear to be cooperating on "gently" moving the world to a "basket of currencies" rather than use the dollar as the main international exchange currency - they don't want us to crash and burn and take them with us. A slow and gradual process is the best that we can probably hope for.
How can the USA cooperate? For one thing, how about reducing federal, state, and local expenditures by 25% (OK, I just made up that amount, but it sounds about right).
Painful? You bet. Government workers will have salaries and benefits reduced, as will the general population. Deals with labor unions will be broken. Benefits form the ponzy scheme known as social security will be cut back.
Corruption needs to be nipped. As a starter, how about a tax on financial transactions that do not involve real goods and services: apply a 1% tax to hedge fund investment transactions, etc. Slow down the non-productive use of money.
Bush, Obama, and Congress have already proven themselves to be firmly in the pockets of corporations and their lobbyists - that will not change. Why should people who get to make the rules be fair with the rest of us?
between 2000 and 2008 the population went up apparently 26.7% (http://quickfacts.census.gov/qfd/states/04000.html) and nationally inflation from 2000 - 2008 has been (http://www.westegg.com/inflation/) 23.8%. put together (multiplicitively) they add up to a 56% increase in cost to provide exactly the same services as in 2000 assuming everything increased in cost with inflation since then (which it might not). Since 2000 GSP has grown from 158 billion to 257 billion, and the budget went from 17% of gsp to 20%. (27 - 50 billion dollars). That doesn't seem significantly out of order to me. If you're ideologically pegged to the idea that state governments should never exceed 17% of gsp then I guess you're reallly angry, but a difference of 6 billion dollars (44 vs 50) without any indication what that money is going for is a bit unfair. I'm not from, nor have I ever been to arizona and I've spent about 2 minutes studying their budget, so I have no sense of what's new or different since 2000.
To actually balance the budget they could, by your reasoning only go back to last years budge, and be fine.
On 55 billion in spending to be 1.6 billion behind in these times doesn't seem a huge problem. They're concerned with a so called 'general fund' which is 10 billion dollars which they directly control and 1.6 billion out of that is inconvenient but again, doesn't strike me as as catastrophic as they seem to be presenting things. 1.6 billion dollars would equate to 0.6% tax on everything - or a 3% increase in taxation, however you want to look at it.
Political theatre doesn't necessarily equate to any fundamentally serious problem, other than general incompetence on the part of politicians and their unwillingness to make minor changes.... which isn't exactly news.
California's situation, which is a 100 billion budget and 60 billion in revenue is somewhat more serious, by just about any measure. I live in Ontario (Canada), we have a budget of about 100 billion canadian dollars with a projected revenue of about 95 billion, so the situation here isn't particularly dire.
In Denmark the former tax minister Peter Brixtofte was mayor in the Farum municipality (he's apparently infamous enough to get his own Wiki page in English).
He implemented a similar scheme in Denmark (now called "Farummodellen"). If we ignore the fact that this was and still is against the law in Denmark, Farum municipality has ended up with the worst economy in any municipality in the country, despite the fact that it used to be one of the richest and most prosperous ones.
To give you an idea of the state it left them in:
In Denmark we have several types of taxes, the municipalities set two types: Municipaly/council tax and property tax. All non-calculated numbers below taken from here
And compare these two for two fairly close and I think fairly comparable municipalities:
In 1995 it was 17.30 and 0.60 percent respectively for Farum (sell and lease back)
In 1995 it was 19.20 and 0.88 percent respectively for Lyngby Taarbæk
In 2005 it was 22.80 and 1.80 percent respectively for Farum (sell and lease back) (total increase of 5.94%)
In 2005 it was 19.90 and 0.83 percent respectively for Lyngby Taarbæk (total increase of 0.54%)
Taxes doesn't tell the whole story of course. So let's look at expenses for the two, calculated pr resident:
In 1995 it was (Euro)4,256 for 17,835 residents in Farum (sell and lease back)
In 1995 it was (Euro)4,526 for 49,578 residents in Lyngby Taarbæk
In 2005 it was (Euro)8,949 for 18,662 residents in Farum (sell and lease back)
In 2005 it was (Euro)7,572 for 51,611 residents in Lyngby Taarbæk
So, an increase in expenses of 110% and an increase of 4.6% of the population for the sell and lease back municipality
And, an increase in expenses of 67% and an increase of 4.1% of the population for the other one
Now, I'll be honest and say that economics is tricky, and it doesn't get easier when you factor in Brixtofte's convictions for corruption and criminal breach of trust and the still unresolved main case against him partly involving the sale and lease back issues, but all in all it really really didn't pan out in Farum, despite the municipality getting a huge (Euro)268M subsidy paid out over 15 years from the government.
Even without looking elsewhere, think of it like this:
Government owned: expenses = Maintenance_g
Privately owned: expenses = Maintenance_p + profit
The only way that (maintenance_p + profit) < (maintenance_g) is if maintenance_p << maintenance_g, in which case you'll either end up with a horribly maintained building, possibly unsuitable for people to work in, OR you're paying low level government employees way too much. Last I checked that the latter has never been the case. When's the last time you heard someone say "I'll get a nice cozy government job - it pays a lot better"?
Then riddle me this, from the New Deal until Reagan and the tax cutters at all costs, we were the envy of most of the world. I know you are going to hit back with the stagflation of the '70's, but that was more a product of the oil shock and paying for Vietnam. Until Reagan screwed up CA's higher ed, college was free and most of the country was headed down the same road. I live in CA, what we are experiencing now is a direct result of prop 13. If it were repealed tomorrow, a year from now we would be ok, not great but ok. The other half of the equation is the insane trade policies we(the upper class) have forced upon most of the world that is eating we (the middle and lower classes) alive. A protectionist trade policy was put into place by Hamilton and it worked for over 200 years. A progressive tax system forces a more egalitarian society to arise. It also tends to encourage reinvestment in the company, rather than exorbitant CEO salaries. Why pay someone $50 million when 49 of it is going to be taxed at %90, better to put it back into the company. Everything the Right wing GOP has done to this country has been nothing but deleterious to it. I arrive at this conclusion by simply looking at history. I remember when this country was full of hope and a chance to have a better life than your forebears. Now I fear for my grandchildren, at best they will be wage slaves to some faceless corporation.
In the last 8 years, Arizona has had a Republican majority in their government. If they passed more spending and benefits than they could pay for, they have no-one to blame but themselves.
I live there, and I am astounded about how shortsighted and stupid the legislature is. If they keep decimating school spending, no companies will want to relocate here, and their tax base (and draw for producing citizens, not retiree's and snowbirds) will continue to shrink.
Suppose you were an idiot and suppose you were a member of Congress