arnold taking a page out of mervyn's book?

The LA Times reports today that Gov. Arnold Schwarzenegger is proposing selling 11 major state properties--including the L.A. Coliseum and San Quentin State Prison--in order to raise between $660 million and $1 billion in cash. State Sen. Roderick Wright (D-Inglewood) points out that this may perhaps be a bad idea, at least in terms of those properties that are actually generating a profit for the state:

Sen. Roderick Wright (D-Inglewood) said selling the Coliseum is a bad idea, because it is well-used and turning a profit.

"You've got a depressed market, so you are not going to get its full value," Wright said. "To try to sell the Coliseum now in a fire sale is not a prudent thing to do."

But perhaps even more worrisome is the idea that the Gubernator wants to sell properties that the state continues to need and would likely need to lease back after selling them. While the governor's proposal optimistically refers to this as "the kind of mechanism used by commercial property owners to free up cash," this is another example of shortsighted free market analogs. The selling off land for businesses makes them nimble, allowing retail to relocate to better locations, for example. But what the state is doing here is selling off valuable, profit-generating property for short-term gain, and then increasing state operational expenses by leasing back the property previously owned and thus used for free. No one can pretend that we're just going to up and relocate the operations of the Coliseum, and moreover, we shouldn't; unlike a business, which is rightly interested in quarterly profits, the state needs to be thinking about the long-term effects of these transactions on Californians. This seems to be of the sort of too-clever financial card-shuffling that we should all be a little wary of at this point. (Thanks Karl for the helpful analysis).

The state, however, may be between a rock and a hard place, and no options are looking that good right now. Make no mistake: Republicans put us here by blocking new revenues in the original Democratic-controlled legislature's budget. Just another one of unending signs for the need of revenue-raising reform, and the reform of the dreaded Prop. 13 that has locked us into this mess.