Monday, May 12, 2008

How To Fix California's Red-Ink Budget

Sale of California’s Surplus Property Would Lower State’s Tax Liabilities

[Independent Institute, Oakland CA--Newsletter May 13, 2008]

California is in a quandary. Facing up to $20 billion in red ink, Gov. Arnold Schwarzenegger has proposed issuing $3.3 billion in new bonds, postponing $1.5 billion of debt payment, and cutting spending. According to Independent Institute Research Fellow William F. Shughart II, the governor should consider another option for helping to balance the state’s books: selling some of the state’s 22,727 buildings and more than 6.7 million acres of land.

Unfortunately, this option has been completely overlooked. “As of last October,” writes Shughart, “bids were actively being solicited on just three properties: a Highway Patrol station in the South Lake Tahoe area, 2.7 acres of a 20-acre parcel at the Los Angeles Reception Center, and 17.6 acres in Santa Clara County at the Bay Area Research and Extension Center.”

Yes, the state’s taxpayers would have been better off had the state’s surplus properties been sold when property values were higher, Shughart notes, but the state’s house is in such fiscal disarray that a property sale would still improve the prospects of the state’s taxpayers. “Disposing of surplus property is a partial, short-run solution,” concludes Shughart. “The longer term answer is budget reform and spending restraint.”

“Sell State Assets to Close Budget Gap,” by William F. Shughart II (Press-Enterprise, 5/8/08) Spanish Translation

Taxing Choice: The Predatory Politics of Fiscal Discrimination, edited by William F. Shughart II

“Explicit manipulation of the tax system to control personal choices violates the long-standing principle that taxes should be general. Discrimination through taxation is as destructive to democracy and liberty as discrimination in any other form. Taxing Choice exposes the fiscal rot that ‘targeted’ tax adjustments represent.”
—James M. Buchanan, Nobel Laureate in Economics, George Mason University

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