Wednesday, October 7, 2015

Asset sale ghosts!

This is the fifth installment of the "Philadelphian Horror Story" series, in which we tell you about the monsters lurking in the city's budget.

Asset sale ghosts!

Courtesy of

This is the fifth installment of the "Philadelphian Horror Story" series, in which we tell you about the monsters lurking in the city's budget.

If the city sells off its bridges, buildings and parks, will that choice later haunt residents like the terrifying spirits of Poltergeist?

All the stars seem to be aligning for the city to soon peddle off large properties or utilities, like its airport, roads and parking meters. Mayor Nutter has created a task force to examine the idea, known as “asset sales.” A financial adviser says the city could possibly make almost $500 million from hawking Philadelphia Gas Works.

City Council President Darrell Clarke also supports asset sales. He thinks the city could raise much-needed cash and potentially avoid future tax hikes if it beefed up asset sales, which now bring in a few million dollars annually. According to Econsult, the city could make much more:

Source: City’s five-year plan, Econsult

But if the city sells off the wrong asset, it could haunt residents like a ghost. For instance, if the city peddled its parking meters or PGW, rates might go up. After Chicago leased its parking meters to a private company in 2008, rates skyrocketed. In Indiana, rates more than doubled after the state leased a toll road to private companies.

But then again, according to financial adviser Lazard Ltd., a gas rate increase that is now scheduled for 2016 might actually be prevented if the city sells PGW.

There are other potential benefits of asset sales. If the city sells a large property or utility, it could use that money to pay down debt, which is eating more and more of the city’s budget each year:

Source: Pennsylvania Intergovernmental Cooperation Authority

The city's debt costs rose from $432 million in fiscal 2008, to $476 million in fiscal 2009, to $483 million in fiscal 2010, to an estimated $519 million in fiscal 2011 — and they're projected to increase again to $556 million this fiscal year.

Still, there are plenty of reasons to have the Ghostbusters on call. Critics say that asset sales have also led to worsened service quality and layoffs in other areas.

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Every year, city government spends slightly more than $4 billion. Where does all that money come from? More importantly, where does it go? Are we getting the most bang for our tax buck? “It's Our Money” is a joint project between Philadelphia Daily News and WHYY, funded by the William Penn Foundation, designed to answer these questions.

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