Monday, May 20, 2013

Wisconsin for sale! Tomorrow's JFC preview

Big day on the agenda at the Legislature's Joint Finance Committee tomorrow. I want to go over probably the biggest story that'll come out in this meeting (albeit far from the only one).

Wisconsin for sale! This was the headline story in the Journal-Sentinel today, in their typical method of reporting on something that reflects bad on Walker, but waiting till the last second to do so to keep the anger down. Under current law, the State Building Commission must sign off on the DOA wanting to sell any state assets, and the Joint Finance Committee has to approve of the actions of both before something can be sold off to a private interest.

Well, Scotty wants to take out the middleman in the process, and be able to have the DOA pull the trigger whenever they want, without any interference from those meddling legislators. The LFB released a series of papers on the subject as part of their dump of info when the JFC meeting was set up last week, and I'll focus you on the passage talking about the rules (or lack thereof) that the Governor's provision would set up when it comes to selling off state assets, especially involving assets of the UW System, which has previously been off-limits by Wisconsin law.
Provide DOA and the Building Commission similar authority related to the sale or lease of state-owned real property, and the use of the proceeds from the sale or lease of such property. Specify that both DOA and the Commission could sell or lease any state-owned real property, except for specific exemptions, whether or not the property or facility is in use or the agency is required by law to operate the facility. Authorize DOA or the Commission to sell or lease of state-owned real property under the jurisdiction of the UW System Board of Regents or property held by DHS at the Northern Center.

Specify DOA could only sell property if the sale is approved by the Building Commission, but would not be required to obtain Commission approval for the lease of any state facility. Authorize the Building Commission to lease state-owned real property with or without the approval of the agency. Specify that the Building Commission could not sell or lease any property after being notified by DOA that an offer for sale or a lease agreement is pending on that property.

Beginning on January 1, 2014, require each agency to biennially submit to DOA an inventory of real property under its jurisdiction together with an estimated fair market value of each property. Require that the agency specifically identify any under-utilized assets in the inventory. Specify that no later than July 1 following the receipt of the inventories, DOA would be required to obtain appraisals of all properties in the inventories that are identified by the Department for potential sale. DOA would be required to submit to the Building Commission, an inventory containing the location, description, and fair market value of each parcel of property identified for potential sale.
And oh yeah, the DOA makes the call on this, regardless of what the actual inhabitants of the building or asset think.
[The bill would] provide DOA the authority to lease state-owned property, without the approval of the agency with jurisdiction over the property. The bill would allow DOA to sell such property without agency approval, and DOA indicates that it was the Governor's intent to extend similar authority to potential leases of state property;
This is yet another centralization of power by this Administration, cause God knows you can't have things like rules or oversight or any sort of dedication to the public interest. It also makes it a lot easier to deal direct with the campaign contributors without having others ask too many questions about just why something's getting sold.

Now what might be sold? Well, that's information on a need-to-know basis, and Walker's DOA says you don't need to know yet.
Staff from DOA indicate that the authority provided to the Secretary of DOA is intentionally broad, because at this point DOA does not have a thorough inventory of the properties the state owns. DOA has yet to identify which properties may make financial sense to sell, and of that group, which properties are marketable. As a result, the Governor did not want to limit the authority to sell or lease state-owned property to specific types of property or to property of specific agencies until an inventory of such property is compiled, and those properties that are in the best interest of the state to sell or lease are identified. Given this uncertainty, no funds associated with the sale of those properties are included in the Governor's 2013-15 budget.
Now what about what the money from any asset sales might be spent on? Well, other than paying off any debt/mortgage that the state might owe on the asset itself, they won't say what they'll do with that either. As I mentioned earlier this year, it could be used to pay off costs from Walker's proposed giveaway to his buddies from the Road Builders.
The bill would provide the DOA Secretary or the Building Commission with discretion to determine which outstanding debt to redeem using those remaining proceeds. Specifically, in determining which outstanding bonds to redeem, the DOA Secretary would only have to give consideration to whether the debt service on the property being sold or leased was paid from a segregated fund and consider redeeming other outstanding debt related to that fund. However, The DOA Secretary would not be required to use the remaining net proceeds from the sale of a state property to retire other debt on other properties held by the agency whose property was sold. While this discretionary authority on which debt could be redeemed from state property sales proceeds may be similar to current law, the DOA Secretary and the Building Commission would have significantly broader authority to sell or lease state property under the bill.

Staff from DOA indicate that one of the primary reasons for requesting the authority to sell or lease state-owned facilities is so that the proceeds from the sale of those assets can be used to retire outstanding state debt. Specifically, it is the administration's intention to use any property sale proceeds to retire state transportation-related debt in order to offset a portion of the transportation debt authorized under the budget bill ($994.2 million in total). This could include past [General Fund]-supported transportation related debt to offset some of the $200 million in GPR supported transportation debt recommended to fund a portion of the Zoo Interchange highway project. The Department of Transportation Secretary, after acknowledging concerns related to the level of transportation bonding under the bill, also indicated in testimony before the Joint Finance Committee that proceeds from the sale of state assets would be used to retire GPR supported transportation-related bonding.
And later on, the LFB paper says the sales proceeds could be used as a method of replacing General Fund revenues, reducing costs of operation of staff to run the business (and possibly increasing the rates charged by the campaign contributor buyer of the asset and increasing the costs for the state agency that has to now get the service from the contributor buyer). It could also be used to fill budget holes that may show up, much like how the Walker folks decided to use $25 million in foreclosure settlement money to beef up its surplus instead of, you know, helping people stay in their homes.

So there you go. Walker's DOA has told the JFC and people of Wisconsin the following: "We won't tell you what we're looking to sell or what could get sold, we won't tell you how much it'll bring it in, we won't tell you how we'll use it (maybe roads, maybe not). But give us the ability to do what we want, and give up your ability to say anything about it. Just trust us."

Because hey, giving agencies freedom to go out on their own with taxpayer dollars hasn't caused us problems before, right (cough- WEDC! -cough)? And after all, Scott Walker and company would NEVER go back on their word and not have an agenda going on behind the scenes would they?

P.S. As usual, Charlie Pierce has the best take on Walker's Yard Sale, and on the big picture behind this sellout of the state.

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