States looking to cash in assets

USA Today reports:

States and local governments across the USA are preparing to cash in valuable public assets for one-time windfalls that could reap tens of billions of dollars.

Illinois hopes to get at least $10 billion by selling its lottery and an additional $15 billion for leasing all or part of the 274-mile Illinois Tollway. Missouri plans to auction its student loan portfolio. Pennsylvania is considering leasing its highways, and Chicago is studying a plan to lease Midway Airport to private investors.

The deals would let governments collect billions of extra dollars without raising taxes but would reduce their future revenue.

Investment banker Carol Rein of UBS Securities says foreign investors like government assets in this country because similar investment opportunities in Europe and Australia have been successful. Assets such as toll roads and water systems are attractive to investors because they have little competition and generate steady revenue.

States hope to get high prices because of strong investor demand, and at the same time rid themselves of operations that private enterprise might operate better. In return, investors will manage the enterprise and pocket future revenue. The proposed deals vary widely, from outright sales to leases ranging from 25 to 99 years. Some come with restrictions, such as limits on raising tolls, that lower the price investors pay.

Hopefully,we will see the notion of "public goods" be destroyed.