Two years ago, U.S. officials proposed trimming the federal deficit by selling assets like roads and airports, and then leasing them back. Now, California's leaders have hit upon the same bad idea.
Governor Schwarzenegger and the Legislature want to pare the state's $25 billion deficit by selling 11 office buildings for $1.2 billion and then leasing them back. This fiscal sleight of hand is a bad idea and will saddle our next generation with untold costs.
According to the non-partisan Legislative Analyst's Office, the state would receive money up front from the sale of the buildings, then lease them back for 35 years. The net cost to the state would be $1.4 billion.
This is like taking out a mortgage on your home, and paying 10 and a quarter percent interest. At the end of 35 years, the loan is paid off and you still don't own your house. If you want to stay, you have to pay rent for the privilege of leasing back your own home.
But there is still hope that sanity will prevail. The properties sale could be blocked. According to Joe Cotchett, an attorney representing two former state employees in a lawsuit to stop the sale, "this represesnts an unprecedented transfer of taxpayer-owned property to private investors."