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It Has Come to This: Arizona Selling its Government Offices

We’ve written extensively about the dire straits in which the state of California finds itself (click here).  But the Golden State is certainly not alone.  The states that saw the greatest excesses during the housing bubble are the same ones feeling the most pain today.  Consider Arizona:  The New York Times reports that “In Need of Cash, Arizona Puts Offices on Sale.”

The office building houses most of the State of Arizona’s government and was recently put on the market to help this broke state close its budget deficit.

It is looking like a pretty good deal, if the state can prove it is credit worthy…

To help close a $3.2 billion revenue shortfall, lawmakers allowed the sale and lease-back of the executive office tower, the buildings that house offices for both chambers of the State Legislature, as well as 10 prison complexes, a state mental hospital and other buildings. (For now, the historic Capitol, with its grand dome and aging interior, is not for sale, though state officials continue to ponder the possibility.)

Yes, the State of Arizona is actually considering selling its Capitol building!   What’s next, corporate naming rights?  How does the “Coca-Cola Capitol Building” sound?  Or the “Starbucks Statehouse”?  The possibilities are endless.

At any rate, the handwriting is on the wall here:  States can only close their budget gaps so many ways, and all involve some combination of higher taxes and lower levels of services for those dollars. This problem isn’t going away.

Charles Sizemore, CFA
Co-author of the recently-published Boom or Bust: Understanding and Profiting from a Changing Consumer Economy