howardnlby Howard Stephenson
Officials in Salt Lake City and Salt Lake County are talking about investing public money in a $45 million renovation of Main Street’s old 1919 Pantages Theatre which was later renamed Utah Theatre. The project would restore the theater to its former glory. A draft report from Wikstrom Economic & Planning Consultants that predicted a 2,700-seat venue could generate tremendous economic benefits. The report predicts $74 million in ticket sales over five years and $33 million from restaurants, lodging, transportation and gift sales over the same period. Consultants say that the city, county and state would also reap new revenues.

According to a recent Salt Lake Tribune story, Rick Howa, owner of the property and a construction company is willing to work with local governments to restore the theater. Advocates say Salt Lake City needs a large theater to house large touring programs.

County Council member Randy Horiuchi is pushing renovation and in fact tried to get money from the Legislature this year to renovate the theater, but failed. He now is considering the option of putting a bond on the November ballot.

Salt Lake City Council member Jill Remington Love has also expressed support, thinking the city’s Redevelopment Agency (RDA) would provide some fo the funding.

Re-circulating Money is Not Real Economic Development

While there are many cultural benefits to having a downtown theatre larger than existing venues, this proposal is not true economic development.

Economic development occurs when businesses and individuals increase productivity or when individuals and businesses are able to attract money from out of state. Perhaps some tourists from Wyoming and Idaho may drive down to catch a play, but we’re not talking about a lot of people. Moreover, some tourists who already happen to be in Utah may spend a little more money than they otherwise might have, but probably not a lot more.

There is however a big downside to raising taxes to build a downtown theater. Horiuchi wants to issue a bond, causing existing businesses and individuals to pay higher taxes. There is then less money to invest in capital equipment and expansion which reduces business’s ability to increase productivity and sell more products.

The proposal to use Redevelopment Agency subsidies to support the renovation is just one more way for city councils to take property tax dollars from school budgets and give them to subsidize arts patrons. Salt Lake County already imposes the Zoo, Arts & Parks (ZAP) sales tax to fund these activities. Why should property taxpayers face a front door tax increase for the bond and also a back door tax hike through the RDA?

Higher Government Spending Is Not Real Economic Development

Proponents of the bond will argue that government spending stimulates the economy. However, so does spending by individuals and businesses. Since state and local budgets must be balanced, whatever additional money is spent by the state must be made up in higher taxes, which means less money for individuals and businesses to spend.

Besides, since personal savings rates are nearly zero (and in fact negative by some measures), individuals are currently “stimulating” the economy as much as possible. What Utah really needs are more high wage jobs, and Horiuchi’s theater doesn’t create high wage jobs. Horiuchi’s proposal would tax people more in order to encourage them to spend more money downtown instead of spending more money in the suburbs. There is no net economic gain to the state.

Since Utah’s bankruptcy rate is already twice the national average, how much more can taxpayers pay and how much faster can residents spend than they are already spending?.

We can create more high wage jobs by letting high wage companies keep and invest more of their own money.

If the bond is placed on the ballot proponents of the bond will also argue that this will only cost taxpayers a Big Mac per person per month. But as Utah Taxpayers Association Vice President Mike Jerman points out, every item in the $2.4 trillion federal budget can be broken down to a Big Mac per person per month. The real question is, how many Big Macs can we afford?