Should cities sell heirlooms to pay bills?
As Detroit debates the question regarding its treasured art museum, many cash-strapped municipalities are facing similar hard choices.
Does it make sense for cities with severe budget problems to auction off prized municipal assets? Or in doing so, do they risk selling the very things that help make them viable, interesting and unique?
That's the question under debate in Detroit, which is teetering on the edge of bankruptcy. Some Motor City officials have come under fire for suggesting the city-owned Detroit Institute of Arts sell off some of its famous multibillion-dollar collection to help relieve some of its hometown's crushing economic burden and to pay for basic services.
Since the start of the global recession, cities all over the U.S., and indeed the world, have been acting like a cash-strapped couple wondering whether they should part with a valuable heirloom to help pay the monthly mortgage bill.
In 2010, Newark, N.J., sold 16 buildings, including its police and fire headquarters and the city's symphony hall, to deal with an $80 million budget deficit. Now it's leasing back some of those buildings from their new owners. Late last year, Baltimore agreed to sell its historic Senator Theatre (pictured) over the objections of the city's comptroller and at a substantial loss.
And earlier this year the city of Dijon, the capital of France's famous Burgundy wine region, auctioned off half of its coveted municipal wine cellar to help pay for local social programs.
Sometimes these asset fire sales can backfire. In 2008, Chicago's then-mayor Richard Daley signed a 75-year lease on the city's parking meters for $1.2 billion to an international partnership led by Morgan Stanley (MS).
But as Matt Taibbi reported in Rolling Stone, not only did the deal deprive Chicago of revenue from its widespread parking-meter system, but it also did little to alleviate the city's budget shortfall. And he notes that in some Chicago neighborhoods, "the meter rates went from 25 cents an hour to $1 an hour in the first year of the deal, and then to $1.20 after that."
Critics of such municipal sales worry that local governments letting go of long-term valuable assets in exchange for a one-time payment are shortchanging themselves.
"This is tantamount to selling the family china, only to have to rent it back in order to eat dinner," economist Yves Smith, the author of the blog Naked Capitalism, told The Associated Press in 2010.
Art and its value are, of course, in the eyes of the beholders, so the issue of art collections can be tricky. But the defenders of the Detroit Institute of Arts are preparing for a long legal battle, if necessary, to keep their priceless collection intact.
"We are standing by our contention and belief that we hold the collection in trust for the public," DIA executive Vice President Annmarie Erickson told the Detroit Free Press.
Why not? If you or I were as stupid with our money as the various levels of government are, we'd be forced to sell off items to draw down our expenses or pay off debts. Government should be no different, instead of constantly raising taxes on fewer and fewer people to continue over-promising and under-delivering, they should look at actually reducing costs and returning government to balance.
The real problem is that the politicians are so hungry for power that they can't be honest with the people and tell them that the gravy train is over. If you took ALL of the money and assets of all of our billionaires away in taxes, we could balance the budget for 1 year. But now, all the billionaires are broke, so what happens in year 2? Most government from city, to county, to state to national is now unsustainable if costs/expenses continue to rise and nothing is done to grow commerce to match.
Whatever's necessary to keep then in the life style they become accustom to?
FREE PENSIONS? LIFETIME BENEFITS? NO CAPS?
You know Obama will try and bail out that sink hole of minorities, aka Detroit. Might as well, same as Government Motors and Chrysler "Fiat for short". Maybe after Michelle and his daughters get back from an umpteenth vacation. Nice sunny day out. Bet Al Gore will blame Global Warming.
No, art does not belong to the city, It belongs to the people. City works on the tax revenue and they must keep their expenses within those limits. They cant keep hiring and then keep paying high salaries to themselves.
It is impractical for small cities to maintain full separate services, they must combine and keep shared services and municipal prescence.
Yes they should. They borrowed the money.
And after they pay off debts, bills, etc. they should shut down. 99% of ALL city "services" are either not wanted or needed! The ONLY thing they should be allowed to do [if at all] is to provide police protection and that should be in competition with other protection services. Anything else, I bet private enterprise, could do it better cheaper and faster, as long as they aren't granted monopolies.
I think the question is: What created the deficit in the first place? In the early 1900's the federal income tax was started and was 1% of a couples adjusted income of more than $4,400. That equates to about $88,000 in today's dollars. That doesn't even include all the other taxes imposed on us today, state sales tax, property tax, luxury tax, gasoline taxes, etc. I did the math and my tax burden is around 40% and I'm just a working man!
To me, the problem appears to be that those empowered by the people(us) have no idea how to live within a budget. Maybe I'm naive???, don't most households live within their means ( a budget). Those who don't, lose their homes. Oh wait, mortgage crisis of 2008! What if the government proposes to send all the good citizens(especially our law makers) of this fine country to an Economics 101 class?
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
[BRIEFING.COM] The stock market ended the midweek session on a mixed note. Blue chip listings bolstered the Dow Jones Industrial Average (+0.4%) and S&P 500 (+0.3%), while the Russell 2000 (-0.4%) and Nasdaq Composite (-0.02%) underperformed.
Equity indices began the day in the red, but wasted no time regaining their flat lines. Small-cap stocks were not as fortunate as the Russell 2000 spent the day in the red.
Upon returning into positive territory, the key indices were ... More
More Market News
Do it once a year. This allows the best-performing asset classes to take off and run.
MUST-SEE ON MSN
- Video: Easy DIY smoked meats at home
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'