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February 10, 2011
A Return to Sanity: Jerry Brown Stops Privatization of State Buildings
California Governor Jerry Brown this week halted the “fire sale” of 24 state buildings. Outgoing governor Arnold Schwarzenegger offered the buildings to a group of investors for $2.3 billion in a long term “lease back” deal. The state would have netted $1.3 billion after paying off existing loans on the properties. Then it would have been obligated to lease back the property for 20 years. The governor said the plan was essentially "a gigantic loan with interest payments that equal … over 10% every year."
Brown called the deal a budget gimmick which he dismissed as "the ultimate in kicking the can down the road." The nonpartisan California Legislative Analyst described the deal as "poor fiscal policy." The LAO calculated that the sale-leaseback deal would have ultimately cost the state billions more than it initially gained.
LA Times Columnist George Skelton called it “arguably the worst real estate deal the state of California had ever conjured up. The sale would have benefited us taxpayers for one year, but our kids and grandkids would have been paying for decades.”
California State Controller John Chiang applauded Brown’s decisions declaring that "selling low and renting high would not have served taxpayers' interests."
Senate President Pro Tem Darrell Steinberg (D-Sacramento) said Wednesday that the plan was a "fiscally irresponsible idea."
Last year, State Treasurer Bill Lockyer said that the deal “is poor fiscal policy and bad for taxpayers.”
Virginia Assembly Drops Bill to Privatize Liquor Sales
The Virginia Assembly rejected Gov. Robert F. McDonnell's proposal to privatize the state's liquor stores- the biggest legislative defeat of his tenure, according to the Washington Post.
Opponents charged the plan that would have tripled the number of retail liquor outlets would lead to an increase in alcohol consumption, a loss of $47 million each year in state revenue and a rise in liquor prices. Republican legislators were concerned the legislation would have given big-box retailers and edge over mom-and-pop stores.
Californians Reject Privatizing Library System
A successful campaign to Keep Libraries Public led by a coalition organized by the Friends of the Stockton Library and Concerned Citizens Coalition of Stockton, stopped a proposal to privatize library operations. San Joaquin County Board of Supervisors and the Stockton City Council have agreed to keep the regional library system public. Library Systems and Services, LLC (LSSI), a private company based in Maryland that operates several public libraries around the country, was the only company to respond to the County's RFP to privatize library operations.
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