I’ve heard about privatizing government, but John Kasich is taking it to the extremes.  If you’ve ever wanted to be the State’s landlord, John Kasich is going to give you that chance.  Unfortunately, we won’t get the opportunity to evict him from the Governor’s Mansion since he won’t be living in it.

WBNS Channel 10 in Columbus reports that lawmakers are considering selling various State buildings, including both the Riffe Center and the Rhodes Tower to help plug the budget deficit.  So, theoretically, we’re one Josh Mandel slip up from evicting the Republicans out of their State government buildings, at least.

Apparently, the Strickland Administration began studying the issue but the Governor put the idea on hold indefinitely months ago, but now the Kasich Administration is picking it up and saying its:

“something we’ll be looking at very, very closely."

The State would then lease back their old property from the buyer… this, somehow, saves the State money.

Statehouse FOR SALE

California, which is facing undoubtedly a much worse budget crisis than Ohio considered the same idea, but it’s non-partisan Legislative Analysts’ Office concluded that such an idea was really, really, really dumb:

We estimate that the sale of buildings would result in one-time revenue to the state of between $600 million and $1.4 billion, but that annual leasing costs would eventually exceed ownership costs by approximately $200 million. Over the lives of these buildings, we estimate the transaction would cost the state between $600 million and $1.5 billion.

In our view, taking on long-term obligations—like the lease payments on these buildings—in exchange for one-time revenue to pay for current services is bad budgeting practice as it simply shifts costs to future years. Therefore, we encourage the Legislature to strongly consider other budget alternatives.

Naturally, upon receiving this advice, you probably already knew that California still is trying to sell its buildings, even though the same legislative office also concluded that the deal the State is considering is the equivalent of a 35-year mortgage at an 10.2% interest rate.

Arizona did sell its State buildings and then leased them back.   But really, is that a wise thing to model after?

Deals that would generate the targeted $735 million in revenue would mean state lease payments totaling $60 million to $70 million a year, according to budget analysts.

Over two decades, that would equate to at least $1.2 billion in lease payments. Once the leases had expired, the state would again take ownership of the properties.

Arizona sold its state buildings, including its state legislature building for $725 million. The State is supposedly paying it back at a 4.57% interest rate over twenty years.   What’s the future value of $725 million at 4.57% discount rate in twenty years? Nearly $1.7 billion.  According to all media accounts, the State is expected to spend slightly less than that in the lease payments over the twenty years.  Still does it make budgetary sense to spend $1.2 billion over the next twenty years simply to be able to generate $725 million today? 

That’s “one time” money, but comes with long-term costs.  Where’s Arizona, which is still facing a budget crisis, going to come up with the money to make the lease payments?  And once the State mortgages off its assets, how does it plan on having the funds next year for the spending the $725 million in financing proceeds covered this year?

If John Kasich is looking very, very closely at this, then he’s looking at the worst form of one-time money to try to balance Ohio’s budget.  Seriously, how is this better than the State accepting federal stimulus money.

How does Kasich reconcile this with his frequent criticisms of Strickland using one-time money in his last budget?

Kasich Lied

Evangelize!
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  • Anonymous

    I thought he was going to sell the state parks to coal and oil companies before he’d sell state buildings. Is no one interested in buying the Ohio Turnpike? I heard the company that bought the Indiana Turnpike is having buyer’s remorse.

    I think we are going to hear a lot more cockamamie ideas from Kasich. Why does Kasich sweat so much when he is being interviewed?

  • Pingback: Tweets that mention John Kasich is thinking about balancing the budget with “one time” money -- Topsy.com

  • Fotogirlcb2002

    are there no new ideas out there — everything this man says comes from some other governor –some other persons ideas- ( Iguess if they work its ok but it appears to me by what was said here by example it doesnt)
    well wouldnt it be humorous if he sells these buildings and is late on payments — gets throwed out ! I truly dont get it — pay more than you sell for ? there is NO quick fix to the budget problems for Ohio or any other state
    to stubbornliberal:
    the sweating reminds me of the old crime shows on Tv–bright lite shining and they ask “where were you on election nite ” lots of sweat…

  • Green Iris

    could this be considered privatizing the buildings? lol
    every time I think it can’t get worse, you post something new…

  • http://twitter.com/CharlesCApps CharlesCampbellApps

    If the New Governor doesn’t put in place gatekeepers like Gov. Strickland did with Nadine Howard, Iris Cooper, and Michael Bowers, he will get the good ideas like Allen Hydro Energy Corporation (AHEC) tried to share with Gov. Strickland. His gatekeepers kept innovation away from him that could have created over 30,000 new renewable energy jobs in Ohio. http://wbsinccd.tripod.com/ahec/

    Politician can’t create jobs, but their Dept.of Develkopment and Third Fronteir Projects must stop playing games that deny opportunity to innovators who can, because we don’t meet the artificial, economic and racist barriers established to prevent great ideas from getting a fair evaluation and financaiul support.

    I voted for change and I hope Ohio’s New Governor is bold enough to appointment and hire people more concerned about turning this state around than playing the same old political and personal games. I’m ready if Governor -Elect Kasich is. Renewabl Energy, High Speed Rail, Innovation in Logistic and Manufacturing. Ohio will lead the nation in jobs and economic growth and my company Allen Hydro Energy Corporation is waiting to help him and his administration.

  • http://plunderbund.com Joseph

    You may very well have a legitimate beef with Ohio’s Energy Resources Division and some Strickland appointees, Charles, but I think you are seriously misinformed about John Kasich.

    He has all but promised to kill Strickland’s green energy initiatives and he already sent the $400 million in high speed rail money to NY and California.

    And racist? I’ve heard Ted Strickland called a lot of names but racist was never one of them. He and his appointees in the DOD have provided a great deal of support to minority-owned businesses over the past 4 years.

  • guest

    If only there were some way for a state to create loan obligations and repay them WITHOUT losing infrastructure…

    I suppose the bond market is open to bidders, though, whereas this process can be a completely opaque handout to campaign investors.

  • Anonymous

    This comment was made by Allen Hydro’s CEO. The company is seeking over $100 million in government funding to construct a 20-70 story high rise building with a vertical water circuit that generates hydro-electrictic power… I find the claims of creating 30k jobs rather impossible to believes, especially since Allen’s own web video claims 10k jobs could be created.

    Regardless even the 10k figure seems highly misleading. The Hoover Dam never required more than a workforce of 5k at a time to build, for example.

    Mr. Campbell’s company has sought, apparently unsuccessfully, over $1 million in Third Frontier money.

    He apparently is unaware that John Kasich campaigned on killing Ohio’s best chance to develop high speed rail by rejecting the funding to begin the 3C passenger rail system.

  • Anonymous

    I’m scared to think what this man might do if left to his own devices

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  • Anonymous

    I’d disagree. For the most part, all Kasich offered was the words jobs and attacks on Strickland over the issue. He refused to give any details as to whet he would cut. Never talked about privatizing liquor… downplayed privatizing the Turnpike, too.

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