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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.
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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OK, answers to your question:
(1) Yes, they do have to pay rent. Where will the rent come from? From the proceeds of selling the building.
(2) Yes, they want to buy it back, they will pay more for it than they got. The rent money they'll have sent will be gone forever.
(3) Yes, the state will end up losing money on this.
(4) No, it is not a BS accounting scheme, it's actually quite straightforward. It might be a bad financial decision. Or it might not.
You see, this is not about saving money. It's about having enough cash on hand to pay the bills. From a financial standpoint, it's a lot like taking a loan. Does it make sense to take a loan to buy a car, even though you end up spending a *lot* more? Sometimes yes, sometimes no. If you don't need the car, it doesn't make sense. If you have the cash on hand to buy the car without risking running out, it doesn't make sense to take the loan unless you've got really *excellent* investments. If you don't have the cash to buy a car, and you *need* a car to get a job, then the loan makes sense.
Does this make sense for a state? Well, the deal is you get cash up front but in the end pay a fee for the use of that cash, just like a loan. The alternative is to either (a) obtain more cash or (b) eliminate current cash outlays. In other words, raise taxes or cut spending.
If you raise taxes, you may delay the economic recovery in your state as businesses choose to relocate to places with lower taxes.
If you cut spending, you may store up problems like bridges that need to be replaced because they hadn't been painted; an increasingly ignorant and unemployable population; greater costs of fire, crime, and public health crises which are borne in an arbitrary way by random population members, which *also* cause businesses and people to relocate.
Now if you can find the cash you need by identifying *wasteful spending* that accomplishes absolutely nothing, then hallelujah! On the other hand, reducing spending on *useful* things isn't always a financial bargain.
Post may contain irony: discontinue use if experiencing mood swings, nausea or elevated blood pressure.
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.