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Call it a sign of desperate times: Legislators are considering selling the House and Senate buildings where they've conducted state business for more than 50 years.
Dozens of other state properties also may be sold as the state government faces its worst financial crisis in a generation, if not ever. The plan isn't to liquidate state assets, though.
Instead, officials hope to sell the properties and then lease them back over several years before assuming ownership again. The complex financial transaction would allow government services to continue without interruption while giving the state a fast infusion of as much as $735 million, according to Capitol projections.
'We need the money'
The state has conducted sale/leaseback deals in the past, though rarely.
This is different. Manos believes it would be the first time the state has sold and leased back state buildings with the intent of using the revenue to fund general operations rather than particular projects.
"We need the money," said Senate Minority Whip Linda Lopez, a Tucson Democrat. "You've got to find it somewhere."
Under the most recent legislative proposal, the state would seek a series of lease arrangements spanning as much as 20 years. Deals that would generate the targeted $735 million in revenue would mean state lease payments totaling $60 million to $70 million a year, according to budget analysts.
Over two decades, that would equate to at least $1.2 billion in lease payments. Once the leases had expired, the state would again take ownership of the properties.
House Majority Leader John McComish called the payments preferable to a tax increase, as proposed by Brewer, or alternative fiscal schemes such as selling future income from state Lottery sales in exchange for a lump-sum payment.
"What are our choices?" asked McComish, a Phoenix Republican. "We could cut more, or we could raise taxes more. Borrowing over the long term, we think, is better for the people, better for the economy."
While the state is looking to sell and lease back selected properties, it also may try to contract out the operations of some prisons. The concessions provision is expected to be included within the new budget proposal, and legislative analysts believe it could generate as much as $100 million (on top of the sale/leaseback revenue) for state coffers. Private, for-profit prison operators would bid for the right to manage selected facilities, but the state would maintain ownership.
The concept concerns prison officials, who worry whether a private operator would be equipped and trained to handle the state's most hardened criminals. In a letter to Brewer last month, Corrections Director Charles Ryan wrote that a private operator would pay lower wages and provide less training.