Local Governments’ Parks and Recreation Spending

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Happy New Year to everyone!  I hope you and your family had a wonderful time celebrating the New Year.  My family has a bit of a tradition around New Year to visit a park and spend some time outside.  That made me think a great way to kick off 2014 would be with a fiscal newsletter on North Carolina’s Parks and Recreation System.

Parks and Recreation (P&R) spending occurs at all levels of government in North Carolina.  There are parks funded though the state parks system, though counties, and even through individual municipalities.  Some counties have decided not to fund P&R at all, and instead let local communities fund those projects; others do the opposite.  In 2012, 71 counties spent money on parks and recreation, as did almost 200 municipalities.  When we talk about governments spending on P&R, that includes parks, golf courses, tennis courts, football fields, basketball courts, recreational courses, and all cultural activities not already included with the park system.  In total, including county and local funding, there was over $138 million spent on P&R at the local level in North Carolina in 2012.

While many families enjoy benefits from P&R departments across North Carolina, these could be even more beneficial to taxpayers.  Traditionally, city and county P&R departments provided parks and user-fee-supported sports leagues — soccer, softball, etc.  In today’s communities, many P&R departments have expanded well beyond these boundaries, and some have started providing uncommon services that benefit only a handful of citizens, such as golf courses and equestrian centers.  P&R departments have also started to provide many services and facilities already offered by the private sector, like full-service gyms and martial arts instruction.  

Where citizens of these specialized services benefit, the taxpayer loses.  The activities offered by P&R departments are tax-supported and thus compete unfairly with private-sector providers.  It is not only that they receive tax money, but also that they don’t pay taxes.  So the taxpayer cost of these subsidized activities is not just the direct tax subsidy, but also the lost taxes that would have been paid by private providers.  Cities and counties should restructure their P&R departments to eliminate activities and services that are offered or could be offered by private businesses and those that serve only a small minority of residents.  Local governments should also implement user fees to recover the full costs of services that benefit only specialized groups such as golf courses or equestrian centers.  These changes would help local communities better serve their citizens and also be a more responsible use of taxpayer dollars.

Additionally, this spending creates a political constituency that benefits elected politicians and P&R bureaucrats at the expense of most taxpayers.  Let me explain.  By providing a free or highly subsidized activity, the P&R department creates a special-interest group out of people interested in that activity.  That small group will lobby for the continuation and expansion of those specialist services, transferring the costs to taxpayers, most of whom do not benefit.  A very relevant example seen in many parts of North Carolina is the losses incurred by city golf courses.  Funds to maintain city golf courses are paid by taxpayers for the benefit of a small group of golfers, whose incomes are generally higher than the average city taxpayer’s.  If local P&R departments can provide yoga, kickboxing, golf courses, equestrian centers, extreme sports, cooking classes, vermicomposting (worms) classes, etc., are there any limits on what they can provide to specialized interest groups using taxpayer subsidies? 

While city and county parks have an important role in the quality of life across North Carolina’s communities, the dollars spent by P&R departments need to be handled in a fiscally responsible way.  Expensive services for small populations do not help the overall community, and those tax dollars should be redirected to the activities best suited for a P&R department, such as those public parks and recreational baseball and soccer fields most of us remember from our youth.

Today in Financial History: January 9^th

1790: Insider trading gets off to a roaring start as Treasury Secretary Alexander Hamilton submits to Congress his "Report on the Public Credit," which proposes buying up distressed bonds to consolidate the national debt. U.S. and state bonds, which had been trading at a fraction of their value, immediately surge in price. In one of the earliest, and most shocking, cases of insider trading on record, several members of Congress hire sailboats and stagecoaches to take them south faster than the news can travel by foot. They can snap up bonds at bargain prices before Southern newspapers spread the news of Hamilton’s proposals.

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