Integrating Public Property in the Realm of Fiscal Transparency and Anti-Corruption Efforts

Abstract

The area of government property asset management is relatively new in public management. Most public wealth is concentrated in public property, and expenses associated with it constitute a substantial part of public budgets. The chapter ventures into two international "hot topics": practical enhancement of public financial resources through better management of property asset and curbing corruption in the historically corrupt area of government-owned property. The chapter provides a conceptual and methodological framework for governmental decision-makers and their advisors and ends by formulating and discussing a number of issues that require further professional and public debate.

This chapter is published in Finding the Money: Public Accountability and Service Efficiency through Fiscal Transparency (http://cps.ceu.hu/jointpubl_findingmoney.php), Gabor Peteri (Editor), Open Society Institute (OSI), Budapest, 2008.

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Introduction

Governments own an impressive range of property: real estate (land, public housing, water distribution systems, roads, office buildings, etc.); movable property (vehicles, equipment), and whole enterprises. While thinking about governmental property, it is useful to keep in mind two important aspects –legal and financial. The legal side is related to how governmental ownership of property is defined, documented, and protected. It also defines whether and how governmental property can be alienated (sold, leased, mortgaged), what kind of limitations exist on uses of governmental property, etc. The financial side is related to a very broad area of how governmental property is (or isn't) incorporated into financial reporting (accounting) and financial planning (budgeting). In accounting terms, from the balance sheet viewpoint, real estate and movable property constitute fixed (or capital) assets that are, as a rule, the main part of non-financial assets on governmental balance sheets. Such particular types of capital assets as land, buildings, infrastructure, and equipment are usually distinguished as separate lines on the balance sheet, while other types are often added, depending on local specifics (for example, a specific asset type can be "art work" or "municipal housing").

Asset management of public property is understood as the process of making and implementing decisions about property acquisition, use / management, and disposition. Until very recently, public property asset management had been very non-transparent, inefficient, and not sufficiently integrated in public financial management even in the most developed countries and their cities. Over the last decade, however, new approaches to public property have emerged that apply standards of economic efficiency and effective organizational management.

This paper discusses a specific range of issues related to integration of public property asset management into fiscal transparency and anti-corruption efforts. The paper considers issues related to property owned by all levels of government (central, local), but also focuses on some specifics associated with municipal property (property of local governments).

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