March 18, 2011
Wisconsin Governor Scott Walker’s original toxic budget proposal would have given the state government the right to sell state power plants in sole-source deals without legislative approval. The proposal failed to make it into the final bill after it was disclosed that the Koch Brothers (a major Walker contributor) had energy businesses that could have benefited. But it’s just the tip of the iceberg. States and cities, strapped for cash, are being courted by Wall St. investment firms including Goldman Sachs, Morgan Stanley and JP Morgan looking for fire sale deals of public assets like government buildings, roads, airports and parking lots.
“The Governors’ Garage Sale” in BusinessWeek lists just a few of the bargains. Slate's “Cities for Sale” examines the problems when Wall St. firms take advantage of desperate governments that sell too cheaply and sign contracts that tie the hands of policy makers for generations.
Even though many of these deals don’t succeed, they still look lucrative to some former elected officials. Former Gov. Ed Rendell recently joined the investment bank Greenhill & Co. as a senior partner to focus on these types of infrastructure and asset sales. In office, Rendell failed to secure his biggest and boldest public infrastructure goal — the leasing of the Pennsylvania Turnpike.
In the most comprehensive study of its kind, Following the Money 2011, researchers at the United States Public Interest Research Group (U.S. PIRG) graded all 50 states on how well they provide online access to information about government spending. States were given “A” to “F” grades based on the characteristics of the online transparency systems they have created to provide information on contracts, subsidies and spending at quasi-public agencies.
“The good news is that since last year’s Following the Money report, state governments across the country have become far more transparent about where the money goes,” explained Phineas Baxandall, Senior Analyst for Tax and Budget Policy at U.S. PIRG and co-author of the report. “But even the leading states still have a lot of room for improvement.”
New Jersey’s Governor Chris Christie’s proposal to privatize the New Jersey Turnpike toll collection tells the story. The state’s Request for Proposal sets minimum wages at $12 an hour for full-time and $10 an hour for part-time toll takers. That’s $24,960 for a full-time worker breathing auto exhaust all day. Toll workers currently make as much as $65,000 – and still struggle to pay their mortgage and make tuition payments for their college-bound children.
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