By selling public assets, local and state governments are raising funds and paying down debts without increasing taxes. The strategy was first applied to toll roads, and now parking garages and state lotteries are up for sale or lease to private investors. Asset concessions are used to bridge budget gaps while increasing or maintaining revenue from unprofitable assets.
Source: Jay Young, PA Times, Vol. 30 no. 3, March 2007
After years of reduced federal support from Congress and the Bush Administration, state and local governments have recently been aggressively pursuing new sources of revenue to meet the service requirements of its citizens. Increasing taxes on income, real property, or even sales taxes are widely viewed as anti-business, anti-citizen and the equivalent to political suicide….
… Recently governments have begun to privatize assets to generate increased cash from either one time payments, a royalty like stream, or a combination of the two…
Source: California Budget Project, Budget Brief (.pdf), June 2007
In conjunction with his May Revision to the 2007-08 Proposed Budget, the Governor proposes to privatize the California lottery. The Governor suggests that the lottery could be leased on a long-term basis to a private contractor for a one-time payment of up to $37 billion.
1 Documents prepared by investment bankers suggest that the state could receive $13 billion to $18 billion from a long-term lease. In addition to promising that public education would receive, at a minimum, “the same dollar level of funding that it received in the highest year of lottery funding,” the Governor states that proceeds from the lease should be used to pay down the state’s debt.
2 The Governor’s proposal assumes that a private contractor could significantly increase lottery ticket sales. This Budget Brief examines whether the California lottery is, in fact, underperforming; whether privatization is necessary to increase lottery sales; and policy issues raised by the Governor’s proposal.
Source: By Dale Kasler, Sacramento Bee (CA), Friday, May 18, 2007
If California tries to lease its state lottery to private investors or unload a state-owned student-loan business, as Gov. Arnold Schwarzenegger proposes, there will likely be no shortage of interested parties. Providing capital to a growing privatization movement, investors are offering billions for state lotteries, toll roads and other government-owned assets nationwide.
Source: By Evan Halper, Los Angeles Times (CA), 11:54 AM PDT, May 10, 2007
Gov. Arnold Schwarzenegger is poised to call for privatizing the state lottery, a move that would bring California a cash infusion of as much as $37 billion to help solve pressing budget problems but also could sacrifice a major revenue source for decades to come.
Source: By ROBERT T. GARRETT and CHRISTY HOPPE, The Dallas Morning News (TX), 07:24 AM CST on Tuesday, February 6, 2007
Gov. Rick Perry plans to ask lawmakers Tuesday to follow him in the boldest initiative of his administration: selling the Texas Lottery to subsidize health insurance for 500,000 low-income adults and fund research to help cure cancer in 10 years.
Source: WTOP News Radio, Jan 31st, 2007
A controversial new way for local governments to raise money has found its way to our area. The District is weighing a plan to privatize its lottery.
Under the new plan, a private firm would take over the District’s lottery for the next 20 years or more, in exchange for a huge lump sum payment up front.
Source: By CHARLES DUHIGG and JENNY ANDERSON, New York Times, January 23, 2007
The state of Illinois yesterday took the first steps in selling its state lottery system, hoping to attract as much as $10 billion from investors who, in return, would own a monopoly that could turn out to be the biggest jackpot yet. The sale, which may occur as early as the spring, would not be the first privatization of public property — both Chicago and Indiana have recently earned billions of dollars by signing long-term leases with private companies to run toll roads. But the proposed lottery sale is almost certain be one of the largest privatizations of a state-run program, and it raises concerns that states, some of them critically short of cash, are selling valuable assets that could otherwise provide consistent streams of revenue.
Source: BY DUNSTAN McNICHOL, Star-Ledger (NJ), Thursday, November 02, 2006
State officials are studying whether selling the New Jersey Lottery to a private company can reap big money for cash-strapped state coffers, Treasurer Bradley Abelow said yesterday.
…… The state currently controls the lottery and uses a private firm to operate the lottery machines. Selling the entire lottery could provide the state with a huge windfall, and the buyer could get its annual revenues.
…….. No U.S. state has tried such a deal, Abelow said, but Italy and Greece have sold off portions of their lotteries, reaping millions.
Source: ASSOCIATED PRESS (IL), 6/01/2006
State legislators, led by a top legislative leader, are raising questions about Gov. Rod Blagojevich’s new education plan that could mean trouble for a keystone of the governor’s re-election bid. House Speaker Michael Madigan, D-Chicago, sent a letter to fellow legislators and the governor earlier this week with a dozen questions he has about Blagojevich’s proposal to privatize the state lottery and pump $10 billion into education.