Got access to an extra $18 million? You could be the owner of the state House or Senate.
Got access to an extra $18 million?
You could be the owner of the state House or Senate.
State lawmakers have known for months that they're going to have to borrow money to balance the budget.
Only thing is, Arizona has a constitutional debt limit of $350,000.
There is, however, a loophole: The state can sell off property. And it can lease it back, even with a provision to own it outright.
What makes that "borrowing" legal is that, until the repurchase option is exercised, the state technically retains the right to end the lease, walk away from the deal and turn the building over to the owner.
The concept is not new, with the state having done what's called sale and lease-back maneuvers with state prisons in prior years. And the original plan for the new budget anticipated mortgaging some other properties.
But what changed this week is that the latest list includes the House and Senate buildings themselves, the icons, if you will, of state government.
House Speaker Kirk Adams, R-Mesa, said there really is no choice.
"We're in an iconic recession, an iconic deficit, and so we are utilizing all the tools at our disposal," he said.
"As much as we don't like to do some of these things, we had to make a lot of hard choices," Adams said of the plan to deal with more than a $3 billion gap between revenues and expenses. "And this is one that prevents further reductions to core state services."
Senate President Bob Burns, R-Peoria, said there's nothing inherently wrong with selling off and leasing back the buildings in which state laws are made "as long as you pay the rent, I guess."
Preliminary estimates are that an investor would be willing to give the state $18 million for each building.
Of course, the state would have to pay back far more than that in lease-purchase payments to reimburse the owner.
"There's always a cost to borrowing money," Adams said. "And we'll pay that cost as well."
The investment probably is a safe one: The chances that the state would actually abandon the House and Senate - and the land both buildings sit on - is somewhere between slim and none.
That's proven to be the case with the Arizona Supreme Court, built in the 1980s under a similar lease-purchase plan. As of Wednesday, the state continues to make the payments.