Selling State Assets Easier Said Than Done

With lawmakers and Gov. John Lynch scrambling for every possible revenue source to help balance the state budget, selling off or monetizing state assets might appear to be an obvious choice.

The Pease Golf Course operates independent of the state's General Fund, so selling it would likely have no advantage for state budget writers. (photo courtesy Pease Golf Course)

It looked so good last year that the current budget is balanced, in part, on a predicted $60 million the state will make by June from such sales and monetizing efforts. With that plan, a commission was created to figure out just what properties and other assets should be turned into cash, and how.

But as Lynch and the commission have discovered — and as some lawmakers cautioned last spring — liquidating what belongs to the state is much easier said than done.

In advance of its final report due on Jan. 1, the commission will meet Wednesday in Concord. The eight-member commission filed an interim report on Sept. 30 and among its preliminary findings, it revealed a wide range of caveats for selling or moving out of lease arrangements.

These include many “reverter clauses” requiring that properties be returned to the original owners if the land is to be used for a different purpose than current use. The Manchester National Guard Armory is an example of this complication. Also, if a specific state agency paid for an asset out of its own budget, money from the sale of that asset would have to be returned to the agency, rather than the state’s General Fund.

Another example: Lynch said in June that the state shouldn’t be in the business of owning land such as Pease Golf Course at Pease International Tradeport in Portsmouth. But officials from Pease Development Authority (the quasi-public body that oversees the former Air Force base) said that even if the golf course were sold, according to the agreement with the U.S. Air Force and the federal government that turned the base property over to the state in 1991, the money would have to be reinvested in the airport.

The interim report also said selling the state lottery system would be prohibited by federal law, which doesn’t allow private entities to run state lotteries. The commission also investigated the massive sale and lease back program of state properties in Arizona, but said while the program generated upfront cash, “it was actually more costly in the long run.”

The budget debate last spring included plenty of dialogue about whether or not the monetization plan would work, and many lawmakers predicted it wouldn’t.

“The reality of selling or leasing within a year $60 million of assets,” wrote Sen. Bob Odell (R-Lempster) in his weekly blog at sunacom.com, “possibly buildings, land or even our liquor business, is so unrealistic as to likely create a budget gap after the election of an equal amount.”

This Daily Dispatch was written by Michael McCord, with contributions from Hilary Niles.

>> The Commission Exploring Monetizing Certain State Assets, Enterprises and Resources will hold a regular meeting Wednesday, Dec. 15, at 11 a.m. at Room 100 in the State House.

Posted by Hilary Niles on Dec 13 2010. Filed under agencies & departments, Government, Property, state budget, state property, Weekly Briefing. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry