RALEIGH – When modern-day politicians say one thing and do another, their actions lend credence to the old line from German Chancellor Otto von Bismarck: “When you say that you agree to a thing on principle, you mean that you have not the slightest intention of carrying it out in practice.”
Today’s case in point in North Carolina is the notion, broadly endorsed in the General Assembly just a couple of years ago, that state government should sell some of its unused parcels of real estate to generate the financial capital necessary to make investments in critical infrastructure such as schools, roads, and mental-health facilities. Indeed, back in 2004 lawmakers created the North Carolina Commission on State Property to carry out the task.
Since then, not a single piece of property has been sold. As Andy Curliss revealed Sunday in a superb piece of reporting in the Raleigh News & Observer, both commissioners and state departments have come up with a long list of excuses why specific pieces of property, worth millions of dollars to taxpayers and high-priority state needs, could not be sold to the private sector. Former State Rep. Keith Williams, formerly the director of the commission, said it was “a waste of taxpayer money” and should be abolished. Others Curliss interviewed expressed similar sentiments.
Much of the story fleshes out the extensive role that aides and allies of former House Mafioso Jim Black have played in the formation and operation of the commission. Williams, one of a small group of Republican lawmakers who kept Black in power during the 2003-04 legislative cycle, is among the group. I’m willing to believe plenty regarding the perfidy of the Black machine, but I don’t think it constitutes a full explanation of why the Commission on State Property has in fact sold no state property.
Transferring surplus assets from the public sector to the private sector, so as to make hard assets liquid and generate cash for other uses, is one of those public policies that just about everyone accepts in theory. If it’s “surplus,” that means it’s unneeded. And no one, even we fiscal skinflints, denies that North Carolina state government must spend billions of dollars over the next two decades rebuilding and expanding critical infrastructure. Thus, we should take from Column A and add to Column B.
Only, who decides what is “surplus”? The original concept here was a valuable one, allowing potential buyers to identify attractive properties rather than have the state put only selected properties on the bid list. But no matter how cleverly a state commission is set up, politics and interest-group dynamics will intrude. Curliss related the case of a 122-acre parcel in Alamance County. A neighboring farmer offered to buy the land for $400,000, but the North Carolina National Guard opposed the sale and insisted that the land was needed for training – even though it had not been so used for at least 15 years. The Guard’s position may seem irrational until you consider the fact that it apparently has the power to block a sale and no incentive to favor any sale. It receives no benefit and perceives only a potential cost.
Writ large, that’s why the commission has currently constituted isn’t likely to succeed. The incentives all flow in the wrong direction, in favor of inaction. I can think of two alternative models that might have a chance of success:
• Require the commission to sell a certain amount of state-owned property each year. That could be measured by acreage or sale price. Under that condition, state policymakers would not be deciding whether to sell but instead assembling a list of parcels and ranking them. Interest-group dynamics may still influence where pieces of property end up on the list, but they can’t block action altogether.
• Ensure that state agencies owning sold properties receive a set percentage of the proceeds for their use. Perhaps some agency heads will be more forthcoming about their surplus land if they see a direct benefit, rather than just the risk that assets will flow to other agencies competing for state funding.
More fundamentally, however, state politicians will have to show that they really intend to sell off state assets. Right now, there’s a lot of lip, but the results are zip.
Hood is president of the John Locke Foundation.