Capitalizing The Lot
Under Marc’s post “Lima Gives some budget hints”, commenter Ken says:
there appears to be a proposal made by NEA Walsh to GA to sell RI Lottery gaming futures netting a supposed ESTIMATED $4-4.4 billion
This idea is a complete non-starter.
First and principally, it is the end of the line when an entity, government or otherwise, begins selling fixed assets to pay for recurring operating expenses – in this case, pension contributions. Whether or not such pensions were too generous to begin with is a separate issue. In point of fact, the elected officials who promised these pensions needed to properly fund them over the last decades. They failed to do so.
Secondly, to address such a failure by selling fixed assets is completely unacceptable – simply as a principle as outlined above – and because if such a practice is intiated, there will be no end. Elected officials lacking the will to properly structure a budget or, as appears now to be necessary, to restructure existing contracts, will capitalize and then sell the entire state out from under us in a matter of years.
Think I’m exaggerating? How long did it take the General Assembly to capitalize and then blow through the tobacco settlement?
Capitalization, especially of assets which do not belong to you, is so easy and convenient. It is also a very bad method indeed of addressing a gap in an operating budget.