Bridging the Gap:  Creatively

The Economist this week ran a brief article about Mayor Richard Daley and his "experiment with privatization".   Mr. Daley has been at the helm of the nation's second city for 21 years and "his most interesting legacy...may not be what he gave to Chicago, but what he sold off".  The mayor has sold or leased huge public assets to help close budget gaps (or so was planned).  In 2005, the city leased the Skyway tollway for 99 years at $1.83 billion, parking garages in 2006 for 99 years at $563 million and parking meters in 2008 for 75 years at $1.5 billion.  Apparently a plan to lease Midway airport failed during the early part of the recession.  While the tollway and parking garage deals were very successful, the parking meter takeover was very unpopular -- leading citizens to revolt against higher parking fees by filling coin slots on meters with glue.

While these moves were intended to fill a budget gap, the money has not gone very far.  The article estimates that by 2011, "Chicago will have gobbled up nearly 75% of the proceeds from the 75 year (parking meter) lease".  As most voters "want leaders to balance budgets without federal help, higher taxes or cuts to schools", more cities are looking to Mayor Daley's experiment.  "Dana Levenson of the Royal Bank of Scotland counts about 50 pending deals in North America (for privatization of prior public services) worth between $35 billion and $40 billion."

I found this article quite interesting in light of our discussion in class last night regarding how governments raise money -- essentially taxes -- and how there are some goods that we don't trust to the private sector -- such as our public safety.  It does however appear that certain public services can be successfully privatized -- parking and possibly even roads?  It makes me wonder what the state of Illinois could sell -- the idea of pricing a public service is simply mind-boggling!

Source:
The Economist, September 18-24, 2010. p42.