Stadiums, Water Parks, Restaurants, etc.

Recommendation

Cities and counties should not use taxpayer funds to subsidize sports stadiums, water parks, hotels, restaurants, etc., because those activities are inherently private, not public.

Background

Many cities and counties in North Carolina have ignored the distinction between the public and private sectors by subsidizing or outright funding functions that belong to the private sector. Often, city officials pour taxpayers' money into nonessential city activities while letting essential services such as police, fire, and roads suffer.

The usual culprit behind such misplaced priorities is a quest for "economic development." City council members and county commissioners bring in highly paid consultants who tell them that, just by funding a certain new project, they will attract thousands of visitors with pockets full of dollars to prosper their community beyond their wildest dreams. Unfortunately, many elected officials forget the old adage, "if it sounds too good to be true, it probably is." One needs only to remember the thousands that Roanoke Rapids poured into the failed Randy Parton Theater to recognize the folly. Unexpected (or poorly researched) consequences, such as construction cost overruns and low attendance figures, create deficits instead of the promised profits.

Still, with the projects and their deficits usually paid by so-called visitor taxes (taxes on hotel occupancy, car rentals, and prepared meals), the spending may seem easy to justify. The taxes target visitors who cannot vote to hold elected officials accountable for their failures. The taxes also affect many residents, however, especially the prepared-meals tax. In addition, they unfairly tax many for the benefit of a few, with most of the benefits going to downtown property owners and businesses.

Recent examples

Unfortunately, communities in North Carolina are replete with examples of local governments involving themselves in the private sector on unrealized promises of civic benefits:


Analyst: Dr. Michael Sanera
Director of Research and Local Government Studies
919-828-3876 • msanera@johnlocke.org