And no, this time I’m not talking about TSA scanners. Instead I’m talking about the wasteful and very costly plan to raise money for the state budget by selling off state-owned office buildings, including the State Building in San Francisco seen at right. The State of California saves a lot of money by owning its own office space, but like a junkie looking for a quick buck and deciding to sell their car rather than get a job and generate new income, the state is going to sell it and ten other buildings in the hopes of raising $1.2 billion.
After a state board controlled by Governor Arnold Schwarzenegger’s appointees ruled in favor of the sale on Monday, two former officials fired by the governor for objecting to the sale sued on Tuesday to block it:
The lawsuit claims the sale to a group of private investors, due to be completed in mid-December, is illegal and unconstitutional. It alleges the sale will cost taxpayers at least millions and possibly a billion dollars….
Their lawsuit has two legal claims.
First, it alleges the sale of two court buildings violates a law giving the California Judicial Council authority and control over state appeals court facilities….
The second claim is that the sale amounts to an unconstitutional gift of public funds.
Treasurer Bill Lockyer has opposed the plan, and today delayed the sale of state bonds because of the uncertainty caused by the suite:
Because the lawsuit came after the state advised investors of the known risks – and in the midst of this week’s bond sale – the Treasurer’s Office had to add a supplemental disclosure today and give investors the opportunity to rescind purchases made Monday and Tuesday….
“If this lawsuit succeeds in creating a $1.2 billion hole in the budget, the state is still going to have ample cash to repay the (bonds) on time and in full,” Lockyer spokesman Tom Dresslar said. “And if the legal challenge is successful, it will give the governor and the Legislature an opportunity to adopt a smarter approach to come up with that money.”
Lockyer sold 59% of the bonds that were offered on Monday and Tuesday, and there’s no reason to believe purchases will be rescinded or that future sales will be hurt – despite what some foolish market analysts claim, California is not at risk of default.
Instead California would be taking a step to securing its finances by keeping these buildings. Selling them and then renting the space would be a waste of money, costing more in the long run than it would save in the short term – and thereby weakening state finances.
Let’s hope this suit is successful and that Jerry Brown moves to stop the sale when he is inaugurated in January.
(Flickr image by wallyg)