More about the “privatization” movement that wants to take over public assets and revenue streams:
“A Bill for Backroom Deals “For Any Amount”
The Walker proposal, as introduced in his budget “repair” bill, expressly states that, notwithstanding some other laws, his administration:
may sell any state−owned heating, cooling, and power plant or may contract with a private entity for the operation of any such plant, with or without solicitation of bids, for any amount that the department determines to be in the best interest of the state. Notwithstanding ss. 196.49 and 196.80, no approval or certification of the public service commission is necessary for a public utility to purchase, or contract for the operation of, such a plant, and any such purchase is considered to be in the public interest and to comply with the criteria for certification of a project under [previously controlling law].
(Emphasis added.)
The legal rules for selling the public’s assets that this provision would effectively nullify appear to include those that:
require public bids;
reserve the right of the government to reject bids;
require that any property sold be subject to property taxes;
require that the fair market value of the property to be sold be publicly disclosed;
require at least 14 days for a public commission to review any proposed sale; and
require notification to the legislature in writing of the proposed sale.
(Section 13.48(14).) It would also wipe out the uniform procedures requiring a determination of whether a private contract can be performed “more economically or efficiently” than under state ownership (Section 16.705). It would even moot rules preventing the approval of utility operations that would increase “costs” to consumers without increasing “value” (Section 196.49 (3)).
Key Pipeline Rules Would Be Voided under Walker’s Proposal
Notably, one of the provisions Walker’s no-bid proposal would also void is a state law preventing a public utility furnishing gas to the public from altering the plant to connect it to a different pipeline from the previously kind of fuel, unless the public utility commission certified that doing so is necessary for the public interest and convenience (Section 196.49).”
“But there are limits on conventional municipal debt and yet the sale of public assets is largely unchecked, she wrote. As a form of debt, Roin contends, privatization costs governments more than conventional debt.
It’s a provocative argument as Emanuel considers privatizing other city services and public property. The mayor isn’t the only one. Under pressure to raise revenues and balance budgets, states and municipalities around the country are studying whether to sell public assets or monetize user fees such as car registrations or hunting licenses.
Roin isn’t an expert on privatization. She was a tax lawyer in private practice, and much of her academic research focuses on federal taxation. She’s been a professor at the University of Chicago Law School since 1998.
But an enormous amount of what tax lawyers do is change the form of transactions without changing their economic substance in order to get better tax results. Her background sparked her curiosity about Chicago’s parking meter deal announced in 2008.
Richard Daley, Emanuel’s predecessor, leased the parking meters for 75 years for $1.15 billion to private investment funds controlled by New York-based investment bank Morgan Stanley. Daley had earlier accepted $1.83 billion to lease the skyway.
The parking meter deal, which entitled the concessionaire to all future meter revenues, included substantial rate hikes.
Roin told the Tribune she doesn’t mind paying more for parking but was annoyed by newspaper articles and politicians describing the upfront payments as “windfalls.” The lease of the parking meters and skyway are just the present value of what would have been future tax revenue, Roin said.
The only economic difference between the parking meter deal and a conventional municipal bond is the “contingent” amount of interest payments in the lease transaction, Roin said. Because there is no stated interest rate in a privatization transaction, Roin looked at the rate of return that the parking meter concessionaire expects to earn. She found that the estimates were 10 to 14 percent.
