Friday, February 06, 2004

Writing in the NY Times of Feb 1, John Kasich suggests various ways to balance the federal budget. The last entry on his list of eight common-sense proposals is: "Auction surplus federal assets to the highest bidder." It is hard to disagree. Here is a source of revenue -- and a way to place assets into more productive hands. A Free Lunch. Trouble is most governments do not track what it is they own. Standard government data includes receipts, expenditures and indebtedness. The missing fourth category is, of course, assets. Such an omission by any private entity would be impossible; there would be no way to manage a portfolio. Politicians apparently do not see this as an option or an omission. The fifth edition of Public Budgeting in America by Robert W. Smith and Thomas D. Lynch (2004, 5th ed.) only mentions assets twice in almost 400 pages of text. When the authors give an example of a local government's balance sheet, they list: cash, short-term investments, property taxes receivable, (less allowances for uncollectible taxes), amounts due from other funds and inventory of supplies. Ironically, California's State Auditor/Bureau of State Audits reported in January of 2000 ( that
there was plenty of state-owned surplus real estate in "high-cost counties" that the state could sell but had not. As many as 2,000 spare properties, more than 2.5 million acres (approximately double the size of Delaware), were identified. Some properties had been pending for disposal for 50 years.

The only "solutions" being debated in California include new debt, new taxes and new cuts. Why consider the fourth option?