John Locke Update / Research Newsletter

Local governments should stick to core functions

posted on in Local Government

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I was struck this week when I came across two news stories virtually side-by-side.  One was the story of the Randy Parton Theater — now called the Roanoke Rapids Theater — a failed venture by the city of Roanoke Rapids that was supposed to attract big shows, create tourism, and bolster the economy.

The other was about the Greensboro-Randolph Megasite project, a project to create an industrial site for a large automotive plant in Randolph County.  The city of Greensboro will run water and sewer lines for the site, and Randolph County has purchased 420 acres for the project.

The two are very different.  One’s a theater, an entertainment venue, a partnership with a celebrity (or at least the sibling of a celebrity) that promised glitz and glam.  The other is hardly glamorous, an industrial complex for a manufacturing facility.  The theater is a project from ten years ago.  The Megasite is just starting now.  The theater was a relatively simple project really just involving the city of Roanoke Rapids, who built the theater.  The Megasite project is more compex, with lots of different governments involved.

And yet, there’s a fundamental characteristic that they share.  Set aside the nature of the ventures for a moment.  It doesn’t really matter whether it’s a theater or an industrial site.  Both of these are the sorts of ventures most people think of as primarily being in the realm of private business – theater building, land development.  But in both of these cases, they’ve become government projects.

And therein lies the problem.  These simply aren’t the sorts of business ventures that local governments (or state or federal ones, for that matter) ought to be undertaking.  The Roanoke Rapids experience demonstrates why.  Governments, it turns out, just aren’t very good at this sort of thing.  The theater failed, Randy Parton proved to be an unreliable business partner, attendance didn’t meet projections, and the whole thing lost tons of money.  The city and its taxpayers were left with tens of millions in debt, much of which remains to this day.

Fortunately, in the case of the theater, a private promotions company has come in and is finally managing to sell some tickets to a show or two.  It’s certainly too early to tell whether this will be a success, but there’s at least some hope that a private company may be able to help fix the mess that the local government created.

And of course, private companies make errors in judgment, too.  They gamble on businesses that don’t work, or invest in projects that end up going bust.  The difference is who’s left footing the bill when things go wrong.  In the case of private business, it’s investors and shareholders, who willingly entered into those ventures hoping to make a profit. 

That’s not the case in a local government project.  With a local government project, it’s local taxpayers who are left to pay for a failed business, a bad loan, or a poor investment.  Those taxpayers didn’t get to choose the undertaking.  In fact, the Megasite has significant local opposition.  But they do bear the burden when something goes wrong.

City and county governments should stick to core functions, things like schools, police, fire, public streets, and sidewalks.  They should steer well clear of speculative business ventures that put taxpayers on the hook.

In both of these cases, the local governments involved would have done better to focus on good infrastructure, low local taxes, and strong schools.  If those things are in place — making cities and counties attractive locations for businesses and tourists — then businesses can handle choosing locations and doing their own building and development.  

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Julie Tisdale is City and County Policy Analyst at the John Locke Foundation. She studies the effectiveness of local spending and tax policy. Before coming to the Locke Foundation, she worked at the Centre for Civil Society in New Delhi,… ...

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