How is this different from getting a loan on tobacco money?

By David Safier

I'm honestly confused. I hope someone can explain this to me.

Our Accidental Gov is talking about a plan to raise some money to lessen the budget cuts in 2010. She wants to sell some state buildings.

If it were a straight sale, at least I'd understand it. Then the question would be, is it smart to sell the buildings?

But her plan sounds like the state would, in a sense, be taking a loan, using the state buildings as collateral.

Brewer provided no specifics to her audience at the Glendale Civic Center. But Senseman said the main thing the governor has in mind essentially amounts to mortgaging state buildings, selling them to private investors and then leasing them back over some fixed period until they are once again owned by the state.

This sounds like me taking a loan against the equity of my home. I pay it back month by month, until I pay it off, then the house is mine, free and clear.

So my question is, why not just take a loan based on future tobacco revenues as Napolitano suggested? It seems to me the tobacco money is actually better collateral since, unlike a piece of property, it won't change in value.

So what am I missing? Is it that the people who she would "sell" the buildings to are people who she would like to see make money, rather than other people who would float loans based on future tobacco money?

Help me out, somebody.

4 responses to “How is this different from getting a loan on tobacco money?

  1. Borrowing is borrowing is borrowing. There is no difference between selling the tobacco income stream and selling government buildings, both are assets whose ownership would no longer accrue to Arizona taxpayers.

    “Debt financing allows policymakers to mislead voters”

  2. Also David the savings are not just on taxes and operating expenses but LABOR COSTS. Kroger (Frys) is Union and it found leasing out its stores to competition who are not Union like Albertsons and Wal Mart saved more money on there bottom lines by not having to pay Union Scale and Medical Costs which cost Kroger Billions of Dollars a quarter for over 600,000 employees nationwide.
    I would like to see private companies running the White House and Capitol Grounds rather than the Park Service , plus our National Park system could be run better privatley with more competition!
    Contract renewals would have strict oversight!
    Before you start attacking me on this subject David I suggest you ask how this very same idea is working for Babbitt Brothers ( Bruce Babbitt) as they contracted the Nation Parks consession stands as you see in the Grand Canyon “Babbitt Brother Stores” right off the South Rim in its own shopping center. It was very interesting to have a Secretary of The interior serving at the same time his Family Company had the Stores in The National Parks!
    Babbitts also own Ford Dealers and his brother was Mayor of Yuma at the time.
    I do not like what he did to Dino DeConcini when he promised Dino he would not run for Governor after being appointed after the Governor Died then when Dino began his campaign for Governor Bruce took him on a helicopter ride to the Grand Canyon and said it, “was Gods Will that he became governor as a lightning strike,” and he was going to run for Governor at which time Dino terminated his campaign.
    Dino made many plans and lined up alot of support with-in the Democratic Party for his run and everyone was taken-a-back by Babbitts actions!

  3. David , I know you are from out of town but to use the phrase “Our Accidental Governor” is moronish!

    We in Arizona had other accidental Governor’s Bruce Babbitt and Jane Dee Hull!

    I also noted comments about Sedona’s Mesquite Trees? Anyone who has been to Sedona knows there are no mesquites its all pinion’s!

    As for lease backs , most large businesses own the property then hire a leasing company to lease it out or even sell it until a future date, taking it off there books and tax rolls; example Kroger Food Stores in Tucson(Frys) owns the shopping centers and stores and the land. It has leased some of its stores , after closing down the Frys to Wal Mart Food , providing there canned goods under there label while canning them in the Kroger Canneries, Dairy Farms, and Meat Companies. One example of this is the shopping center at Oracle and Magee owned by Kroger leased to Wal Mart!

    Fry’s Food Stores (Kroger) also owned the shopping center at River and La Canada and SOLD the land and leased the Store to Albertson’s where after that lease is done will return to being a Kroger or Frys Food Store!

    It seems Real Estate Business and Good Tax Practices are not your best subject!

  4. Speakig of loans…the predatory lending industry is coming back