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NEW YORK, Sept 30 New York state will study
maximizing "the value" of its assets via public-private
partnerships so that it can keep making long-term investments
in roads and bridges despite a budget crisis, Gov. David
Paterson said on Tuesday.
A new commission will be created on Thursday, which will
issue its initial findings in 90 days, and more detailed
recommendations in 180 days, the Democrat said in a statement.
Paterson again said he was not considering the sale of any
state assets, adding the new study would examine how to ensure
"adequate government oversight, protection of public employees
and regulation of user fees; use of non-compete clauses; and
prevailing wage and labor standards."
All of these issues have proved controversial in a number
of states that have used privatizations.
In Texas, for example, the legislature enacted a two-year
moratorium for much of the state after critics said Republican
Gov. Rick Perry's program, the nation's biggest, enriched
private developers at taxpayers' expense.
In New Jersey, Democratic Gov. Jon Corzine's turnpike
privatization plan died, partly because its series of sharp
toll hikes proved deeply unpopular.
New York's new 11-member commission, led by Charlotte
Hitchcock, the Deputy Secretary for Labor and Financial
Regulation, will consider which assets could be privatized and
how deals have been done in the United States and overseas.
The governor will appoint the members, with the speaker,
the senate majority leader, the comptroller and the attorney
general each recommending one individual.
"With commodity prices spiking to historic highs -- asphalt
is up 183 percent per ton over the past three years and steel
is up 42 percent over the past two years -- identifying new
ways by which the State finances and delivers infrastructure
projects is paramount," Paterson said in a statement.
The state has been scrambling to address its deteriorating
finances. On Monday, Democratic Comptroller Thomas DiNapoli
said Wall Street's melting profits could cost the state $3.5
billion in tax revenues by March 2010 -- triple the governor's
It was only last week that New York finally decided to
replace the Tappan Zee Bridge, one of the busy Hudson River
crossings, after a decade of debate. A new bridge, plus new
lanes for rapid bus and rail service, would cost $16 billion,
and privatization is an option, state officials say.
Paterson did not mention the state lottery, which former
Democratic Gov. Eliot Spitzer had said could be privatized as a
way to raise $3 billion for state colleges and universities. A
Paterson spokesman had no immediate comment on the lottery.
Chicago sparked interest in public-private partnerships
three years ago by leasing its main commuter link, the Skyway
toll bridge, to Cintra, CCIT.MC (FER.MC), and an arm of
Australia's Macquarie Group Ltd (MQG.AX).
Municipal analysts faulted Chicago's deal, saying no asset
can be properly valued for such as lengthy lease -- 99 years --
which also locked taxpayers out of any of the extra revenue.
Analysts also say privatization should only be used for new
and thus more risky projects. The list of states using this
method includes Virginia and Florida.
Pennsylvania lawmakers have blocked Democratic Gov Ed
Rendell from privatizing the turnpike with Spain's Abertis
(ABE.MC) and Citigroup (C.N).
Other banks and private companies that have raised money
for these deals or served as advisors includes: Goldman Sachs
(GS.N), Morgan Stanley (MS.N), the Carlyle Group [CYL.UL] and a
Credit Suisse CSGN.VX-General Electric (GE.N) venture.
(Reporting by Joan Gralla; editing by Tom Hals)