Many politicians love to say that American families have to live within our means, so government should be able to learn to do so as well. But we local taxpayers don't live within our means if, in addition to our direct personal debts, we also include the local, state, federal and related debt we are obligated to repay.
Setting aside the individual and household debt issues that we have today, let's look at just one very small but illustrative piece of our indirect debt as taxpayers. In the final analysis, taxpayers get stuck with all the bills of government.
When government borrows, the taxpayer owes. Later when the initial financial projections aren't fulfilled, the taxpayer gets the bill. That's the way it works.
Thus, we individuals and families aren't able to live within our means if our elected representatives borrow and spend lots of money unwisely. Eventually we get the bill.
Now let's get back to the thriving convention center business of building convention centers across America. And the losing business of operating those centers after they're built.
Have We Got a Convention Center to Sell You! speaks loudly about the ongoing fleecing of the unsuspecting American taxpayer at the local level. It says that with respect to convention centers, if we build them, sufficient numbers of conventioneers probably won't come. But we still go ahead and build them anyway.
We'll quote pertinent portions of the editorial:
"For two decades, America's convention center business has been declining, resulting in a nationwide surplus of empty meeting facilities, struggling convention halls and vacant hotel rooms. How have governments responded to this glut? By building more convention centers, of course, financed by debt backed by new taxes and fees on already struggling taxpayers.
Back in 2007, before the recession began, a report from Destination Marketing Association International described America's convention industry as a "buyer's market" suffering excess capacity. It's only gotten worse, attracting just 86 million attendees in 2010, compared to 126 million in 2000. Meanwhile, the amount of convention space angling for business has increased to 70 million square feet, up from 53 million in 2000 and 40 million two decades ago.
That's largely because governments refuse to stop making convention centers bigger and hotels even more dazzling, arguing that whatever business remains will flow to the places with the fanciest amenities. To finance these risky projects—which the private sector won't build by itself—cities float debt backed by new taxes and fees on already struggling taxpayers. As Charles Chieppo, a former board member of Massachusetts Convention Center Authority, lamented last year, "Logic rarely has a place in the convention business."
After using Chicago, Boston, Baltimore and many other cities as costly examples of wasting taxpayer money on convention centers, the writer offers some good advice:
"The surest sign that taxpayers should be leery of such public investments is that officials have changed their sales pitch. Convention and meeting centers shouldn't be judged, they now say, by how many hotel rooms, restaurants, and local attractions they help fill. That's "narrow-minded thinking," said James Rooney of the Massachusetts Convention Center Authority this year. Instead, as Boston Mayor Thomas Menino has said, expanding a convention center can "demonstrate to the world that we have unlimited confidence in our city and what it can do, not only as a convention destination but as the center of the most important trends in hospitality, science, health and education."
This new metric—a city's amorphous brand value—is little more than a convenient way to ignore the failure of publicly sponsored facilities to live up to exaggerated projections. But as far as city officials are concerned, that failure is nothing that hundreds of millions more in taxpayer dollars can't fix."
All these big city expenditures make Augusta's $40 million look cheap by comparison. But then I think of all the recent new local construction for judicial centers, county and city office buildings, schools, school administration buildings and the like. We have lots of new buildings, and they all have been pretty much taxpayer funded.
Then I begin to wonder how much we the people really know about what's going on at the local level. And how we'd go about finding out what's what. Of course, there is no general schedule of taxpayer liabilities for special purpose entities, county debt, municipal debt, school district debt, public employee pension liabilities and such. When I think about that, I begin to wonder why.
Next I wonder why the federal government goes through the exercise of borrowing money to send to the local school districts through the state of Georgia. Why can't we just borrow it ourselves?
But then I conclude that we probably wouldn't approve all these borrowings if we knew how much they amounted to in total. We'd have to repay them someday. But don't we have to do that anyway? I'd say so.
Economic illiteracy is bad enough, but not even having transparency makes a bad situation even worse. Why do we have all these government (city, county, state, school district, park districts and many more) and quasi government agencies borrowing money individually on behalf of all taxpayers? Is it so nobody will bother to add it all up?
Who's looking after the taxpayer? My strong belief is that if we want to have the job done right, we'd better watch closely. Because in the end, it's MOM to us and only OPM to the "public servants."
And what happens when the bill comes due down the road? The taxpayers will pay it, of course. The conclusion is that we need to be more vigilant at the front end, since after the horse has left the barn, closing the barn door won't do much good.
Oh, and by the way, my guess is that the Augusta convention center won't be money well spent. If that proves to be the case, it will be just another expensive American white elephant. At least we'll have lots of company.
Then we'll all pay. Except those in on the game, that is.
Thanks. Bob.
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