Sale of Public Assets: Often A Sign of Public Bankruptcy

Whether it is selling parkland in Madison, Wisconsin, or public lands that are part of the National Forest in California, Bush team seeks to sell land, it should be enough to make us take note. While  the Madison situation is not as severe, the Bush rape of public lands has serious environmental and fiscal implications.

The Bush administration Friday laid out plans to sell off more than $1 billion in public land during the next decade, including 85,000 acres of National Forest property in California.

Most of the proceeds would help pay for rural schools and roads, making up for a federal subsidy that has been eliminated from President Bush's 2007 budget. (emphasis added)

Congress must approve the sales, which several experts said would amount to the largest sale of its kind since President Theodore Roosevelt established the U.S. Forest Service in 1905 and created the modern national forest system.

"This is a fire sale of public lands. It is utterly unprecedented," said Char Miller, professor of environmental history at Trinity University in San Antonio, who has written extensively about the Forest Service. "It signals that the lands and the agency that manages them are in deep trouble."

The environmental consequences will draw sharp attention and rebuke, but there is also a Bush fiscal program and with its long range implications for the nation.  It is real simple:

rarely sell capital assets to fund operating programs.

From the Government Finance Officers Association on One Time Revenues:

Practice 4.4

Develop Policy on Use of One-time Revenues Practice: A government should adopt a policy limiting the use of one-time revenues for ongoing expenditures. Rationale: By definition, one-time revenues cannot be relied on in future budget periods. A policy on the use of one-time revenues provides guidance to minimize disruptive effects on services due to non-recurrence of these sources. Outputs: One-time revenues and allowable uses for those revenues should be explicitly defined. The policy should be publicly discussed before adoption and should be readily available to stakeholders during the budget process. The policy, and compliance with it, should be reviewed periodically. Notes: Examples of one-time revenues include: infrequent sales of government assets, bond refunding savings, infrequent revenues from development, and grants. These revenues may be available for more than one year (e.g., a three-year grant), but are expected to be non-recurring. Examples of expenditures for which a government may wish to use one-time revenues include startup costs, stabilization (e.g., to cover expenditures that temporarily exceed revenues), early debt retirement, and capital purchases. Uses that add to the ongoing expenditure base should be carefully reviewed and minimized, e.g., capital expenditures that significantly increase ongoing operating expenses without a sustainable and offsetting long-term revenue plan. Certain variable components of major revenue sources are similar to one-time revenue sources. While they may be addressed in a one-time revenue policy, they also may be considered separately. (See Practice 4.4a entitled: Evaluate the Use of Unpredictable Revenues.)

Comments

[Jon]

How about Wisconsin's Republican legislature's use of the one-time Tobacco settlement to balance the budget a few years ago? To me, that was the most shameful use of one-time money ever.

[Paul]

100% on target. It is hard to imagine a more horrid decision. And the state continues to 'pay' with continued fiscal instablity.