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No-nonsense budgeting

Editorial

Gov. Brown put the state's long-term interests first in halting his predecessor's plan to sell state-owned buildings.

February 11, 2011

Gov. Jerry Brown has been in office for only about a month, and it's way too early to make a call about his effectiveness. But his decision this week to cancel his predecessor's wrongheaded plans to sell off 11 state-owned office buildings to help balance the budget is a sign that at long last, California may have a leader who puts the state's long-term interests first.

Former Gov. Arnold Schwarzenegger's proposal to sell the buildings and then lease the office space back from private owners always struck us as self-destructive, a move we likened in October to a homeowner who sells his appliances, furniture and clothes to pay the mortgage; eventually, with all his assets gone, the bank will foreclose anyway. But that was when decision-makers were relying on an analysis by the Department of General Services that showed that selling the buildings would, over the course of 20 years, end up saving the state $2 million. A November report by the nonpartisan Legislative Analyst's Office found that number highly inaccurate, concluding instead that over the 35-year estimated lifespan of the buildings, the sale-leaseback would cost the state $6 billion. The legislative analyst likened the move to taking out a loan at 10.2% interest.

California's budget situation is indeed dire, but solving the immediate problem by placing huge burdens on future taxpayers is a terrible idea. Brown promises to make up for the lost income from the building sales by borrowing money from special state accounts. That's still going to impose future costs, but the interest payments will be far lower than the future expenses generated by the building sales.

Schwarzenegger had a tendency to favor sleight-of-hand budget solutions that helped keep Sacramento running but did nothing to solve California's structural problems. In this, of course, he was abetted and often topped by the Legislature, which thwarted his best efforts at reform. Brown has so far taken a realistic, no-nonsense approach to budgeting, and we hope he resists the temptation to return to smoke and mirrors.

There is still at least one property that Sacramento doesn't need: San Quentin State Prison, which wasn't included in the 11-building deal blocked by Brown but which Schwarzenegger placed on a liquidation list in 2009. The home of death row is crumbling and will cost more to repair than it's worth. With the proceeds from selling the valuable bay-front property, the state could build a more modern prison elsewhere and probably still have money left over. The prison is a white elephant; office properties are needed assets. The governor should show he knows the difference by halting repair plans for the prison and selling it instead.

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