Wednesday, January 14, 2009

What hath the Goldwater Institute wrought?

I have had several people send me this email today from the Goldwater Institute questioning the validity of the Gaylord deal in East Mesa - an issue that was also covered in the Sunday's Tribune.

You see, they have recently had some success litigating the economic incentives for a project known as CityNorth in Phoenix. Now, it looks like they might go after plans all around the valley which use different deals to encourage development. Its a little funny, since the entire local economy is in a complete and total funk that they would like to shoot down any developments that have a chance to get off the ground, but hey, who needs tax revenue anyway? Certainly not Mesa, Phoenix or the State of Arizona for that matter.

When it comes to the Gaylord project, the simple fact is that the city of Mesa is using revenues generated by the project to help promote the area. If this development doesn't happen, these revenues don't exist at all. Isn't the goal of business for everyone involved to make money? If cities are to be run more like businesses, shouldn't they follow this mantra?

However, according to the Goldwater Institute, no pie is better than 3/4 of a pie.

As it was pointed out to me, there is a larger issue at work here. They say that the problem is when public money ends up on the pockets of private interests, not matter how they use the money. According to their logic, the mere fact that the money is given to a private interest makes the deal against the law. The rub, then, is that their endless pursuit of any public money to private interests will almost certainly spell the end of the charter school industry in Arizona.

See, for a long time, folks like the Goldwater Institute have said that public funding and vouchers for private and charter schools are the best options for people who are in areas where the public schools are under performing. They also tend to argue that charter schools and other education alternatives help make the public schools more competitive, like Rhodes Junior High's international baccalaureate program or the Mesa Academy for Advanced Studies.

Charter schools, other than the ones run by the same bureaucrats from the school districts, are often run by private interests - some as for profit and others as a non-profit. Either way, this public money would be going to help private interests. So where is the difference?

I don't know anything about the CityNorth project, so I can't comment. In the case of the Gaylord project, I know that the bed tax revenue is being used to promote tourism - the same thing it has been doing since its inception. The difference is that money from that area is going to be invested into promoting that specific area.

So, who would you rather spending that money: The City of Mesa, who has probably made cuts in their PR department, or a private business looking to make the most bang for their buck and put as many people in the hotel as possible?


Thane Eichenauer said...

When a government subsidy is a pie then yes, of course no pie beats 3/4 of a pie. Government subsidies mean that businesses who play straight have to pay for businesses that have political connections.

Heath Reed said...

City north and gateway are on the complete opposite spectrum. The incentive was that the city would give 100 mill tax subsidy for a public good in a parking garage for retailers. This is a bed tax in which the money would go in promoting Gaylord hotel, the gateway are and bring interest to Mesa in general. Totally different things here. The Goldwater tuit is being ran by some libertarians who are trying to destroy some good tools that governments use. Now I agree the city north one was a total BS subsidy, but I feel they have not chance with this deal because it is creative and is not giving money away. That bed tax goes to the cvb anyways and they would in turn do the same.

I am not surprised but I think on some projects, they will have success, others they will not. Its just extremist, like the backers of prop 207 pushing for things they don’t fully understand.