Politics from the Palouse to Puget Sound

Thursday, February 07, 2008

"No free lunch, or Whitman County retail mall"

Petitio principii is Latin for "begging the question". It is a logical fallacy in which an argument is assumed to be true without evidence other than the argument itself. Take Jim Fisher's latest anti-capitalist rant in today's Lewiston Tribune. Fisher asks us to assume that private developers somehow belong in the water and sewage utility business. In his mind, the only conclusion is whether the Hawkins Companies should pay or whether Whitman County taxpayers should be bamboozled into paying for Hawkins to get into the utility business.

Clearly, Fisher's argument is absurd. Since the Classical Age, it has been the government that has been in the water and sewage utility business. In the case of the Hawkins corridor development, the county is contracting with Hawkins to build the infrastructure, which the county will then own and operate. The only question here is how all this gets paid for, as there is no "free lunch" for anyone. The county has to pay for this necessary infrastructure and Hawkins has to pay to construct its shopping center. Does every county taxpayer have the cost added to his/her property tax bill or does the cost get paid voluntarily by those who choose to shop at the Hawkins development through sales taxes, many of them likely not even residents of Whitman County? Of course the latter is the best possible solution.

And Fisher's contention that somehow county taxpayer's are being robbed of $9.1 million is also completely fallacious. Imagine that you buy a stock for $500, then you sell it for $3,500. Your original investment has been paid back and you have received a six times return. But according to Fisher's logic, that would be a bad deal, because you could have an additional $500 to spend if only the company issuing the stock had just given it to you for free. Luckily for everyone, Fisher is only a newspaper editorialist and not a businessman or government official.

From today's Lewiston Tribune:
Seen one way, the assurance from Whitman County officials that county-issued bonds financing infrastructure for a new mall near the Idaho state line won't cost county taxpayers anything is completely accurate.

The trouble is, in order to see it that way you have to be wearing blinders. If you aren't, you might cast your eyes at the services that tax dollars from the Hawkins Companies of Boise could be used for other than repaying the bonds.

Seen that way, the deal county commissioners approved Monday will cost county taxpayers the price of the bonds themselves, $9.1 million.

If Hawkins were doing what other developers have done in paying the cost of its own development, county revenues from sales and property taxes on the new mall would begin flowing immediately into county coffers. There, they could be used for essential services like roads, parks and law enforcement.

Thanks to commissioners' largess, however, the first $9.1 million in taxes from the development, plus interest, will go to redeeming the bonds.

That makes the so-called public-private partnership the deal represents less cost-free than Administrative Services Director Sharron Cunningham makes out, when she says it "won't cost taxpayers anything." It remains a public subsidy to a private developer, and there's no getting around that fact.

That does not automatically mean it's a lousy idea, of course. The argument can be made, and county commissioner Jerry Finch has made it, that without the subsidy Hawkins would not build in Whitman County at all. And maybe Whitman County residents are, like their commissioners, so eager to see additional retail development, even if it is closer to Moscow than to Pullman or Colfax, that they are willing to help pay for it.

But those residents should not be gulled into thinking they aren't paying part of the cost. They are paying in forgone tax revenue, and that's assuming Hawkins is able to deliver the revenue being projected. Only after the 20-year life of the bonds, or only if tax revenues exceed what is needed to repay them, will county government benefit financially from this arrangement.

And by then, who knows how many other developers will have their hands in county taxpayers' wallets?

1 comment:

April E. Coggins said...

According to Fisher's logic, the adjoining property owners of Moscow-Pullman corridor should have paid for their portion of the new highway. That would include the City of Moscow.

He is also ignoring Washington State law that forbids private ownership of water and sewer utilities.

And I love this part, "There, they could be used for essential services like roads, parks and law enforcement." I guess he missed the part that we are using a large part of the money to build roads and will also have a new joint law enforcement/fire station out of the deal.