Stop us if you’ve heard this one before. A municipal revitalization project, launched with an abundance of enthusiasm and optimistic projections of its financial viability, collides with the reality of the market and the economy, leaving public officials scrambling to stem the ever-mounting losses and “borrowing” funds from other services to fill the budgetary hole.
Oh, so you have heard this one before.
So have many of your fellow taxpayers across the country.
You might have thought that the first paragraph was a synopsis of News Tribune business reporter C.R. Roberts’ detailed telling of the plight of the Greater Tacoma Convention & Trade Center, a facility that has more than fulfilled its sponsors’ expectations that it wouldn’t turn a profit.
Compounding the sorry saga is that the city has been “borrowing” from a parking revenue fund that was supposed to provide a financial backstop for the convention center for other, as yet hazily explained, purposes, and not paying it back. Which means the city will have to use general revenue funds to subsidize the convention center. Which means city government will have to do even more cutting from a budget that is already in need of slicing and dicing.
But that first paragraph might be describing the situation just up the road in Kent where, according to the Kent Reporter, the ShoWare Center continues to lose money and officials are mulling the idea of charging for parking to reduce the red ink.
It might also have been used to summarize a recent Wall Street Journal story about an $850 million redevelopment project in Kansas City, Mo., that is now carving a hole in the city’s budget. Any of this sound familiar? “Traffic and sales are well below initial projections...” and the city has to set aside millions from a budget that is squeezed to the point where the fire department is facing cuts.
Whether it’s a sports arena or a port district or a mass-transit system, the decision to build some gaudy municipal bauble can always be rationalized that the future tax revenue generated will pay off the debt (as was done in Kansas City, and as is being proposed for the next Seattle arena), or that the losses at the facility or project will be more than made up in increased regional job creation and economic activity.
It’s not even a strictly American phenomenon. Consider this recent rant in The National Post, a Canadian paper: “Governments routinely spend more than they were budgeted. Estimates are voted through without serious scrutiny. Funds that were approved for the construction of, say, border infrastructure end up being spent on, say, gazebos hundreds of miles away.”
Yeah, we know the feeling.
The convention center debacle is part of a larger, depressing and threatening trend. By spending money we don’t have on stuff that, while nice to have, we can’t afford, we limit ourselves on what we can spend for what we really need, not just today but well into the future – barring the unlikely event that this stuff miraculously starts making money.
But are we likely to do anything about it? The historical record is not encouraging. Voters share the enthusiasm for those bright shiny objects, and some of them share the economic benefits those projects generate. Taxpayers are rarely asked, “How much do you think this is really going to cost? How much more are you willing to pay for it? For how long?”
Whether it’s government or banks or businesses or consumers or homebuyers, the crucial question that didn’t get asked was “what’s the worst that can happen?” if a recession hits and the projections don’t pan out.
When it comes to these large, expensive and money-losing government projects, we’re only beginning to find out.