AP NEWS
Related topics

Precede WASHINGTON Bush Easing Rules for Selling Off Public Facilities

April 30, 1992

COLUMBUS, Ohio (AP) _ President Bush today made it easier for state and local governments to sell public facilities such as airports, bridges and sewage-treatment plants.

Advocates of privatization hailed it as a major change in attitude. Others said it could lead to higher costs.

Bush signed an executive order this morning directing federal agencies that helped finance construction of local facilities to reverse their past practice of demanding a hefty share of profits from the sale of those facilities.

″Facilities now run by government that could be owned and operated by competitive enterprises can thus serve the public more fairly and more efficiently,″ Bush said in a speech to the Ohio Association of Broadcasters.

″It gives state and local government more freedom to sell or lease their infrastructure to the private sector,″ the president said.

It was Bush’s second trip to the Midwestern industrial state in just over a week, as he focused attention on states expected to be battlegrounds with the Democratic presidential nominee in November.

The privatization change, part of Bush’s focus on decreasing government regulation, is intended to help financially strapped local governments find new ways of getting revenue, officials said.

It could affect some $227 billion worth of bridges, roads, airports, electric utilities, water companies and other facilities, according to one private study.

That is the total estimated market value of the assets ″that would be viable in the private sector″ if the state and local governments chose to sell them, said Robert Poole, president of the Reason Foundation, an economic think tank in Los Angeles.

He said the foundation’s study was based on an analysis of international marketplace prices involved in other countries that have embarked on privatization, such as Britain.

In cases where grants were awarded many years ago, the federal government probably would ask nothing from a sale, said John Giraudo, a Washington lawyer and lobbyist for defense contractors and other potential buyers of public facilities.

For grants awarded in more recent years, the federal government would receive only a portion of its investment back, officials said.

Bush’s order, in effect, tells the local agencies that ″if they do sell, they will be able to keep the lion’s share of the profits,″ Giraudo said.

″If the state and local governments take advantage of it, this could be a very big deal,″ said Poole. ″This could be the kind of rebuild America campaign that the Democratic candidates are calling for, but for which we all know there isn’t the money.″

Although no one could say precisely how many state and local governments would cash in on the government’s liberalized policy, officials said some have expressed interest in the issue.

Massachusetts Gov. William Weld, a strong advocate of privatizing state services, is awarding private contracts to maintain state highways in Essex County as a pilot project. He also is closing several state hospitals for the mentally ill and mentally retarded, with much of the community-based care to be provided by private vendors.

Weld has looked at privatizing Boston’s Logan International Airport. Massachusetts Assistant Secretary of Transportation Ernie Corrigan said Wednesday that one issue nationwide that has thwarted privatization attempts has been the federal government’s demand for a large share of the sales’ proceeds.

In Los Angeles, the City Council has looked into soliciting bids for the purchase or lease of the city’s four airports.

The newsletter Aviation Daily said airlines were calling on Bush to exclude airports from the order out of concern that private ownership would lead to higher operating costs for the carriers.

Poole said that in many cases there likely will be price increases under private operation, including landing fees for airlines.