Incurring debt isn't always a bad thing
BY World's Editorials Writers
Friday, February 01, 2013
2/01/13 at 6:56 AM
It's certainly a good idea to thoroughly review all state assets with the aim of unloading any that are not needed, as proposed by House Speaker T.W. Shannon.
But let's not kid ourselves. Selling off surplus property is not going to generate enough money to fix up the state Capitol or undertake any other significant work any time soon.
That being the case, why not go ahead with a bond issue to finance Capitol repairs - estimated at about $160 million - and other badly needed projects, and then use any funds generated by property sales to help pay down that debt? That's an idea proposed by state Treasurer Ken Miller, and it makes a lot of sense.
A recent report commissioned by the Legislature found that the state owns 6,910 buildings and leases about 1,000 others.
The report concluded that many of the properties are "underutilized." Many likely wouldn't be marketable because of environmental problems, location and title issues. Some of them, though, are deemed valuable and likely marketable.
But even if they are saleable, the state can't just dump them all on the market at once. That would amount to a fire sale and drive down values for both state properties and others.
Shannon and others feel the state's system for managing these real assets is in need of reform, and he can certainly make the case for centralizing property management and taking the politics out of it. Toward those ends, he is proposing a state Asset Management Board, which would have the authority to sell properties and direct the revenues to high-priority needs such as the Capitol.
But there's no getting around the fact that real estate sales are just not going to generate enough cash to undertake the $200 million in urgent needs that are growing more costly with each passing year.
There's a steady chorus emanating from the Capitol against taking on more debt - a mantra that sounds good to a lot of people. But in fact a very manageable level of debt is actually a good thing to have.
Our current debt level is extremely low. As Miller points out, incurring a little more would allow us to complete projects earlier, when costs are lower, and also would demonstrate to rating agencies that we are maintaining our infrastructure and are able to responsibly handle debt.
It appears some lawmakers have concluded that the federal debt problem means all debt is bad and the state shouldn't take on any more. There's just no comparison between the federal debt and our state's debt. Let's borrow a little now to take care of our pressing needs, and pay it off painlessly a little each year - just like we've always done.
Original Print Headline: Asset sale