Subsidies Cause More Problems Than Cure
Posted by Roldo Bartimole in Economic Development, Media on March 7th, 2010
March 7, 2010… The Plain Dealer reported Sunday about the troubled downtown commercial properties. Empty and emptying buildings. It’s a shame.
“Turmoil in commercial real estate,” says the article by Michelle Jarboe here:
http://www.cleveland.com/business/index.ssf/2010/03/commercial_real_estates_challe.html
Yet The Plain Dealer – with business and political leaders – has been pushing for more and more subsidies to build new. That’s just one of the major reasons there are so many empty buildings. We are helping to create excess.
You can’t build new when you can’t even keep the old relevant.
At the same time retail and commercial properties go into foreclosure Cleveland political leaders are using hefty subsidies to produce more retail and commercial. Why?
You can’t have everything you want. Isn’t that what we teach children?
Why then isn’t that good advice for developers.
As business declines downtown the answer we seem to get is to open new property for development. As buildings are emptying, we are providing very heavy – in the multi-tens of millions of dollars – to the Wolstein project on the East Bank of the Flats.
The Port Authority wants to open land on the lakefront to the same kind of development. Now there’s a push to get rid of Burke Lakefront Airport and open it for development.
Cleveland, in a dirty deal, opened more than 500 valuable acres in Chagrin Highlands two decades ago. Now, Eaton Corporation will move out of downtown to Chagrin Highlands. So will University Hospitals with a new hospital facility. And other business have been attracted to the open spaces at the Highlands, city owned land that never should have been opened to greedy speculators. But then Mayor George Voinovich, tied to the project via his old Calfee-Halter law firm, and then Council President George Forbes, tied to Dick Jacobs, worked a deal that has hurt the city and will continue to damage downtown.
You can’t have it all. We seem to be urged by major institutions to grab more, however.
The Port, of course, has gotten itself into trouble with its attempt to serve more as an economic development body than a port. Its desire to open up land on Lake Erie is self-defeating. Developers, led by John Carney of the Port board, push this direction.
The Plain Dealer has been doing a good job of being critical of the Port Board and how it does business. However, the PD has been a chief cheerleader in the past. It helped push the Port into being a financial conduit, starting with its financing of the Rock and Roll Hall of Fame.
Again, you can’t have your cake and eat it too.
Corporate and civic leaders (aren’t they same?) and The Plain Dealer have pushed and applauded the politicians into thinking they are developers. More and more various levels of governments are acting as economic development entities. As if they know what they’re doing. They don’t. They do what developers tell them.
For years and years the politicians have been using public funds to subsidize almost any project that came to them for handouts. I don’t believe they know what they are doing. They obviously don’t care since it helps them, sometimes with campaign dough, sometimes with kudos and pressure from the totally undiscriminating news media, and sometimes, I’m convinced, via the greased hands of corruption.
How do we stop it?
Citizens have to more and more tell public officials upfront that they dislike all this welfare to business.
Tax abatement and tax exemption have produced some development. However, it’s rather clear it also has damaged other business.
At the same time the public services that cities, counties and state should provide its citizens declines. Cleveland can’t even pave its roads. Not enough money. That has to change.
Here are some links with evidence of what I’m talking about:
Cuyahoga County Keeps Taking Extra Millions from Taxpayers
Posted by Roldo Bartimole in Economic Development, Politicians on March 5th, 2010
March 5, 2010… The quarter-percent sales tax for the medical mart has now cost County taxpayers $87 million. MMPI, Tim Hagan and his Kennedy friends thank you all. Keep it coming, says Tim.
This is to fulfill the agenda of the Greater Cleveland Partnership. The corrupters of our civic life mentioned in my post below. The takers in our community life.
Since January 2008 through February 2010 County taxpayers have paid via the County Commissioners voted sales tax increase $87,131,339.38 for the med mart & convention center project.
That’s $87 million in slightly over two years. How it rolls in!
That is $87 million that could not be spent on food, gasoline, restaurants, toys, theater tickets or even cigarettes. In other words, this is $87 million worth of anti-stimulus money for Cuyahoga County businesses. It’s all take, no give.
That wasn’t the end of our contributions, however.
We have also contributed $63 million for the Browns. Is it in any way worth it? That’s more income really for Randy Lerner and family. Stimulus for the billionaires. And, of course, for the putrid football team.
We’ve been paying sales “sin” taxes on alcohol and cigarette products for the Browns Stadium (used maybe 9 or 10 times a year) since August 2005. It simply picked up from Gateway’s taxes. But you did vote for it.
The total take is $63,088,767.28. Thank you suckers, says Randy.
Just for the fun of it, here’s how the tax breaks down:
Cigarette smokers gave: $14.3 million.
Alcohol drinkers gave: $22.8 million.
Beer drinkers gave: $20.6 million.
Wine & Mixed beverage drinkers gave: $5.1 million.
That is $63 million that can’t be spent on food, gasoline, restaurants, toys, theater tickets or even cigarettes. To say nothing of rent and your mortgage. Another anti-stimulus poke to the wallet and a loss for Cuyahoga County businesses.
It comes in small bites but it’s somebody’s big free dinner.
The arts & culture tax has netted $58 million of your tax dollars since February 2007. The exact take was $58,061,190.71.
The taxes come primarily from cigarette smokers.
The total extra taxes – all highly regressive – total well more than $200 million taken in highly regressive taxes, the kind wealth people love to impose on ordinary, hard-working people.
You know most of it is only the beginning. Because the taxes remain for years and years to come. I doubt that anyone will legally challenge these taxes by a vote.