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The council form of county government has proved its worth once again in
the debate over corporate welfare for professional soccer
Despite heavy pressure from influential legislators, Sandy City
officials, Real Salt Lake officials, and a stable of lobbyists, the Salt
Lake County Council rejected by a 4-5 vote last Tuesday a proposal to
enable a package of nearly $100 million in subsidies for a soccer
stadium complex in Sandy. The project was to include A vote of
taxpayer appreciation belongs to Salt Lake County Mayor Peter Corroon
who had pledged to veto the measure had it passed, and council members
Mark Crockett (R), Jenny Wilson (D), Jim Bradley (D), David Wilde (R),
and Marv Hendrickson (R) for voting no on a misguided proposal to
subsidize professional sports and retail development with tax dollars.
Those voting in favor of the proposal were Randy Horiuchi (D), Mike
Jensen (R), Cort Ashton (R), and Joe Hatch (D). This vote splits each
political party right down the middle, with about half of each party
voting for and against. This issue readily identifies which council
members understand economics and which are merely playing local politics.
The Utah Taxpayers Association urged council members to reject the
proposal as a bad example of corporate welfare. The Association is
pleased that elected officials are finally agreeing with economists that
subsidizing retail, recreation, and entertainment is not economic
development, particularly when the customers of such activities are
locals who already spend most of their paychecks in the local economy
anyway.
The Taxpayers Association argued that proponents of tax subsidies for
pretend economic development (PED) have been misleading taxpayers for
years by claiming that subsidizing retail and entertainment venues
causes local consumers to spend more money. However, such claims
erroneously assume that local consumers are hoarding billions of dollars
because too few local businesses exist where they can spend their money.
PED advocates ignore the fact that near-zero savings rates and very high
bankruptcy rates indicate that Utahns are already prolific spenders.
What soccer promoters don’t realize is that sports fans’ available
sports spectator time (particularly the American male’s time) is already
spent; that to spend time watching a lot of soccer, whether in person or
on Television, will diminish time otherwise spent watching other
sports. Or, for dedicated sports fans with TiVo they may watch more
sports in the same amount of time by skipping through the ads,
potentially diminishing advertising revenues to the teams.
As argued by Taxpayers Association Vice President Mike Jerman, even if
PED caused consumers to spend more money, everyone would be better off
in the long run if households actually cut back slightly on consumption
and savings rates actually/ increased/. “With higher savings rates,
bankruptcy rates would decrease and Utahns would be spending less on
goods and services that, for the most part, are produced out of state
and would allow more resources to be invested in businesses that export
goods and services” Jerman explained. “In the long run, as Utah focuses
more on producing goods and services for export instead of consuming
out-of-state production, wealth will flow into Utah, which will
ultimately allow Utahns to spend more dollars on consumption while
saving more dollars at the same time. Emphasis should be on
export-oriented industries such as IT, biotech, manufacturing, and
natural resources which create high-wage jobs are funded by out-of-state
customers. High wage jobs allow households to spend more money without
decreasing their savings rates,” Mr. Jerman said.
Mr. Jerman pointed out that PED supporters argue out-of-state investors,
retailers and others which sell goods and services to local customers
will not establish outlets in Utah unless they are subsidized by
government. Fortunately, retail markets are very efficient, and if
consumers with disposable income exist in a given area, retailers and
others who serve local markets will establish outlets in that area in
order to earn profits, even if government does not subsidize them.
The PED lobby argues that subsidizing Real would give Utah media
exposure and bring in 100 or more regional broadcast studio jobs.
However, considering the price tag, nearly $100 million at one point
during the Real debate, the costs far outweigh any marginal benefits,
despite claims from the PED lobby that nationally televising the games
of a losing soccer team from Utah would benefit the Utah economy.
“Unfortunately,” Mr. Jerman said, “the Legislature and Salt Lake County
have wasted too much time and energy on PED when they could have been
focusing on real economic development. For the type of money that Real
Salt Lake and the developers have been asking for, Utah could attract a
thousand or more high paying jobs in IT and manufacturing. Instead of
chasing soccer balls, our local officials should be chasing Microsoft,
Oracle, Boeing, AstraZeneca and others as well as local IT and
manufacturing start-ups that import wealth and high paying jobs into the
state.” |
