Editorial: Subsidized attractions have history of failure

Posted Thursday, August 16, 2007 9:49 AM | Contributed by Jeff

Pittsburgh columnist says government funding of new attractions is a waste of taxpayer money. A more general conclusion might be drawn covering any state, any politicians. They don't use their own money and they have no special talent picking what enterprises will prosper.

Read the editorial from The Tribune Review.

Thursday, August 16, 2007 10:24 AM
This is what our government has become...at all levels. Government always believes that they know better than the individual or business how to spend private dollars. Their failure rate is off the charts. Yet there is a sympathetic, and dare I say uneducated, portion of the populace who look to government to solve all of life's problems (health-care, retirement, etc).

A good rule of thumb...if government is funding or providing the service...inefficiencies abound!

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Thursday, August 16, 2007 2:30 PM
^True in almost all cases, but there are times I wish local governments would lighten up on the little guys. Take a look at almost any American downtown, there's usually absolutely nothing there, because nothing can compete with the Walmart machine. Now you're probably thinking, 'Well, if people won't support it then why try?', but people will support it, at least in my town, but no business wants to try to risk it with the cut-throat competition and harsh taxes.

Just this summer, there was a proposal for my city to bring in a water park, of which most initial costs would be paid for by the city. The people crushed this citing 'corporate welfare', but the thing is, people would have loved the idea if the city had paid for and controlled all of it. The water park would have done great because there are thousands of people here all complaining that we don't have one, but no park really has a chance to start off because there aren't enough interested investors in this part of the country, and again, there are too many harsh taxes and limitations to abide by.

So, although the government should stay out of the way of the free market most of the time, sometimes I think small incentives have their place.

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Thursday, August 16, 2007 4:34 PM
Who paid for the various athletic facilities around Pittsburgh?
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Thursday, August 16, 2007 6:15 PM
wahoo:

I'm not familiar with Pittsburgh...but I'm guessing cigarette smokers and heavy drinkers paid the highest burden. It seems a lot of athletic facilities are built on excess cigarette and alcohol taxes!

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Friday, August 17, 2007 12:43 AM
We like to share in Pennsylvania. Taxpayers put up 2 stadiums each in Pittsburgh and Philadelphia just from the general budget. Next Pittsburgh gets a new hockey arena and upgrades and additions to its airport, and Philadelphia gets major renovations and additions to its convention center. This is coming from the first billion in proceeds from the casinos. These would be the same casinos they told everyone to vote in favor of, since the proceeds would be used for property tax relief across the state. I don't think 12 million of us can fit in a hockey arena, convention center and airport.
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Friday, August 17, 2007 7:27 AM
^^ Just curious exactly what airport improvements are being paid for by casino money? Because none of 'em came across my desk or went by my ears, and on top of that, FAA using casino funds would be ... hmm ... illegal? And the new runway at PHL is about 100 rungs higher on the priority ladder right now than anything at PIT for major chunks of funding since it's causing backups literally around the world.

And did you miss the part where the Pens are ponying up for a portion of the new arena too, unlike the Steelers and Pirates ... and oh yea, an arena is a multipurpose venue used for a lot more than hockey, unlike a stadium that hosts 80 losses by a baseball team each year and a football stadium that's used maybe 20 times each fall and winter and sits dormant the rest of the year. So basically it's only good enough for 6 of the 7 major sports teams in PA to get taxpayer funded arenas - when the one with the brightest future in the state asks for some help (not a complete no strings attached gift) it's an issue ...

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Friday, August 17, 2007 9:24 AM
I hate this knee-jerk reaction that government inherently can't do anything right. Here in Cuyahoga Falls, Ohio, the city tore down the local swimming pool a few years back and put in a bona fide waterpark, complete with four pools, speed slides, and a lazy river. It is hugely popular. More recently, we built a brand new athletic center, including an indoor waterpark -- also wildly popular. Both of these facilities were designed, built, and maintained by a Republican administration, by the way.

The point is that there is nothing magical about the divide between government and private investment and management. It's still just people in charge; it's still just the quality of the people you hire to do a job and instilling responsibility and accountability from top to bottom. Many government investments have been ill-thought, poorly managed disasters. But considering 9 out of 10 start-up companies go bust in the first 5 years, the potential for abuse and mismanagement clearly doesn't stop at the mayor's office. Conversely, many government investments have proven to be worth every penny they cost and have been managed efficiently and professionally for years.

Granted, those schemes held up for examples sound awfully foolish and ill-fated in hindsight, but then again we all know the cliche about hindsight, right? Do you think that, if, instead of Dolly Parton, it had been the city of Pigeon Forge that a few years back said, "Gosh, wouldn't it be great to build a Tennessee-themed amusement park right in the middle of the mountains?" that the idea wouldn't have had its share of detractors?

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Friday, August 17, 2007 10:29 AM
The important distinction is that private business failures are not funded with OUR money. ;)

If the argument is that government is a more efficient means of allocating resources, building waterparks/theme parks, etc...well...that just does not pass the smell test.

On a related note there is a big tunnel in Boston that is popular with drivers...I guess this means the cost and inefficiencies are worth it...?

There is nothing "knee-jerk" about believing government is an inefficient decision-maker. Cost over-runs, croniism, and outright fraud rule the day when given free pass to spend somebody else's dollar. Best to assume government knows not what it is doing...or worse.

When the Cuyahoga exception comes around (assuming that private entity could not have built a park cheaper by the way)...act surprised. We all know the cliche about the exception proving the rule, right?

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Friday, August 17, 2007 11:00 AM
As a PA taxpayer, I must side with RGB--way too much of my tax money being spent on things which don't benefit me to any extent. Sorry, sports venues are not one of those things--unless I'm getting free admission as a PA taxpayer. And who didn't know that we wouldn't see that casino revenue relieving taxes?

As for spending those casino taxes on airports and etc., once they become tax dollars, it doesn't matter where they came from, so the FAA needn't worry about any improprieties in that regard. Tax money is tax money. Whether it comes from casinos or my pocket....

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Friday, August 17, 2007 11:04 AM
Jeff's avatar Small town parks and rec departments are a whole lot different than gigantic projects that cost hundreds of millions of dollars to finance, especially since the parks and rec things are maintained and owned by the city. That's not subsidizing private business.
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Friday, August 17, 2007 1:30 PM
Right. There's a huge difference between building a recreational area and financing a stadium or arena. Last time I checked, the local park doesn't charge admission, so that is something paid for by the taxpayers and something that all taxpayers can enjoy. As for stadiums and arenas, I know what RBG is talking about.

There are some cities/states that will outright finance a new venue at the taxpayers' expense, but even when things are privately financed, the taxpayers wind up paying. For years the Giants and Jets have wanted to build a new stadium in the Meadowlands. The teams and the NFL are financing most of the new stadium project but the state is chipping in a few hundred million to improve roads and other means of access to the stadium. I'll certainly appreciate all of that when I'm going to a Giants game in 2010, but how does that money benefit all the people that don't go to the new stadium? It doesn't. Same with the Yankees and the Bronx- after years of threatening to move elsewhere, the city struck a deal with the team where the Yankees pay for a new stadum and the city pays to improve the area around the stadium with better roads, new parking and an improved subway station. That's great for someone like me that attends Yankees games, but what about the millions that don't?

I know it can be argued that by keeping the teams in their respective cities/states, local businesses that depend on those teams will continue to prosper while it's anticipated new business opportunities will arise, but none of that ever seems to offset the tremendous expense that is taken care of with the taxpayers' money, thus the taxpayers never get any kind of tax relief that this kind of thing is supposed to create.

*** This post was edited by Rob Ascough 8/17/2007 1:31:48 PM ***

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Friday, August 17, 2007 2:36 PM
What exactly is this article relating to, anyway? Since this is the Pittsburgh paper, I had assumed it was obliquely referencing Conneaut Lake. If that's not the case, then is there some idea for a new theme park in PA being tossed around? And if it IS the case, then surely managing a little park with one significant roller coaster and a handful of flat rides is not the same thing as running "projects that cost hundreds of millions of dollars to finance..." In fact, I would put it roughly on par with operating a waterpark or recreational facility.
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Friday, August 17, 2007 2:56 PM
I didn't read the article so I don't know what it's talking about- I was just responding to the comments made about what is done with taxpayer money. If the article is talking about a new amusement park, it would depend on who's going to own the thing. I suppose it'd be fine if it were similar to what Westchester County has with Rye Playland (the park is owned by the county), but not if it's going to be built for someone else to own and operate.
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Friday, August 17, 2007 3:20 PM
More thought provocation...

A private run business (say a waterpark) has a financial breaking point. When costs are too much to be met by revenues...bankruptsy ensues.

The government never goes out of business. They just take more of your money. Often times they purposely undersell initial plans...knowing full-well they can rob the tax-payer later for the real cost of a project. They usually sell budget overruns under the guise of financial responsibility. Something along the lines of... "we've already spend 200 million dollars, it would be nonsensical to not allocate the additional 80 million to complete the project."

Whether they get the money from other government budgets or propose more taxes...either way there is no real financial check and balance for government projects.

Just another example of how resource allocation is grossly inefficient with government involvement. People react differently when they do not have a financial stake in their decision results. This is true no matter how honest the individuals involved.

A private backed entity would think twice before placing an amusement park in Flint. For government...it is much easier to take the risk. Afterall, what do the decision-makers lose when their plans fail?

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Friday, August 17, 2007 3:31 PM
Nothing, because by then they'll have been voted out of office, or voted into a new office that allows them to distance themselves from the issue.
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Friday, August 17, 2007 3:40 PM
This is the very reason that government spending is by its very nature...inefficient! Government spending should always be minimized and deferred to private where possible. Too bad this idea has not found its way to either of the two major political parties! It is also too bad that such a large (majority?) segment of the populace are not educated about resource allocation and the most efficient way of doing so.

...there are many more reasons (sociological) involved in explanation about one's desire to support inefficient government spending. My intent is not to get into a huge debate on every inefficiency (I know my beliefs of limited government are foreign to some)...but rather to find a small agreement that on such non-essential projects as amusement parks, sports facilities, bridges to nowhere, etc...government has no business being involved (other than an occasional tax break).

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Friday, August 17, 2007 3:46 PM
Jeff's avatar I only partially agree with you on the infrastructure stuff, Rob. I mean, I don't use most interstates and bridges around me, but there does come a point where they need to be replaced or maintained.
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Friday, August 17, 2007 4:16 PM
That's technically true, but the point is that you can use those things if you need/want to. I don't know of too many interstates and bridges that are built for the benefit of a privately-owned entity, but I'll elaborate more on that in a minute. Something like a new access road for the new Giants/Jets stadium or a parking garage for new Yankees Stadium could be used by anyone, but it's clear those things are being built to benefit a specific part of the population and not the whole thing. No one is going to benefit from those things like they would benefit from their local roads being resurfaced or an obsolete bridge being widened to lessen traffic.

Years ago, there was a huge debate over a bridge in a nearby town. At one point it was for a local highway but it was more or less abandoned when a new highway was built adjacent to it. Eventually a local business purchased land near the bridge, meaning the bridge was now benefitting the owner of the business and no one else. The bridge eventually got to the point where it was crumbling and needed to be replaced. Since the county owned the bridge, the business owner claimed the county had to replace it, but the locals argued that the business owner should pay to replace the bridge because it wasn't serving anyone except him and his customers. To be honest, I'm not sure what happened (that hot topic quickly faded into the background for some strange reason) but I think it's a good example of what I'm talking about.

Where is the line drawn that separates something being built for the good of most and the benefit of a select few? Wish I knew how that one turned out.

*** This post was edited by Rob Ascough 8/17/2007 4:20:50 PM ***

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Friday, August 17, 2007 6:33 PM
But, there's another perspective; isn't every local road for the benefit of a "select few"? Your street really only serves you, your neighbors, and a few visitors a year. Even if you live in a more "urban" area, your local street still probably primarily serves less people in a year than those access ramps and roads into the new stadiums serve in a season, let alone special events, stadium restaurants and merch stores that might be open year round, etc. So, who's to define what "select few" means? Is select few a raw number? Or is it based on the destination? Your argument could be used to justify putting in no maintenance on local roads and using it all on interstates, ramps and arterials (which of course is ludicrous).

Most new roads that are built with public money have to at least go through a cursory benefit/cost analysis. Obviously a 1:1 ratio is next to impossible unless you're talking about say a new access bridge into Manhattan or something (and even that's debatable), but things like stadium access roads when you consider not just why they're being used, but the "cost" of things like congestion effects on local business and residents from smaller road systems, pollution from congestion, accidents due to less restricted access style roads, wear and tear on roads not built to handle the traffic, etc. While those don't come into play more than 10-15 times a year for some places like NFL stadiums, the potential cost there (and PR nightmare when old Granny Mary is standing on her front porch on the news coughing because of the exhaust and you can't hear her - because of the honking horns and drunk people yelling - talking about how this is keeping her from her afternoon nap) far outweighs the benefit of leaving the road network smaller and repaving 50 other side streets.

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