Courage, Councilors

October 3, 2007, 6:00 a.m.

Courage, Councilors

Nicholas Johnson
Guest Opinion

Iowa City Press-Citizen
October 3, 2007
p. A12
Corporate welfare. Subsidies. Tax breaks. TIFs.

All, in effect, transfer taxpayers’ dollars to a business’s bottom line.

Do they make sense for Iowa City?

Our present and potentially future City Council members think so.

My thought? We need more community dialogue, and consensus, before perpetuating this path to public poverty.

I’m not advocating “tax cuts.” I get more from a local park or library for my tax dollar than from Exxon or General Motors for my personal dollar.

“Socialism” isn’t a nine-letter swear word for me. I like public schools, roads and police.

I also think a competitive private marketplace can be the consumer’s best friend.

It’s combining them that produces problems.

Full length books better document our Council’s folly than a column can summarize. But here are some highlights.

Corporate subsidies make no sense for Iowa City both because of the multiple categories of reasons they’re foolish for any community, and the additional reasons they’re especially silly for Iowa City.

The "opportunity costs" are enormous. County Supervisor Rod Sullivan estimates nearly $700 million of property value has been diverted from normal taxation – resulting in either more taxes for the rest of us or cuts in needed programs.

They reek of hypocrisy. How can a business simultaneously say, “Get the government off my back,” while holding out a tin cup?

Corporate welfare tilts the playing field. It’s fundamentally unfair to ask businesses to compete against a favored few funded by government. It upsets a smoothly working free market to no one’s benefit – except the lucky recipient.

If the market won’t back a project, why should the public? If private sector money isn’t forthcoming that’s a pretty persuasive indication it’s not appropriate for the public's money either.

It doesn’t work. Governor Tom Vilsack offered Maytag $100 million not to leave Newton. It left anyway. Should he have offered $200 million? I don't think so.

“Money can’t buy love.” It may buy sex – but we have another word for that. Why compete for businesses that won’t come without bribes? Let ‘em go elsewhere. Besides, a firm that likes San Diego's climate and needs port access to the Pacific probably isn't going to come here for any amount of money.

The subsidy-grantors' record’s not great. Public officials are skilled at keeping constituents and contributors happy, getting re-elected, and moving to higher office. They’re less skilled at evaluating taxpayer-funded business proposals – a lot of which go belly up, miss construction deadlines, or new job goals even with our money.

Alternative approaches do work. Businesses look for more than taxpayers’ bribes; things like an educated and skilled workforce, transportation and communication infrastructure, and quality of life – schools, parks, theaters, neighborhoods, restaurants and natural settings. Those investments will both attract business and benefit the public.

Try “seed funds.” There’s nothing to keep the business community from creating group venture capital efforts called community seed funds – as it has. Those are investments of private money, not gifts of public money.

“Need” is impossible to know. Many projects will go ahead without subsidy. If tax breaks are available, of course entrepreneurs will say they won’t act without them. But how can we know when that’s just blackmail?

Lack of transparency. It’s virtually impossible for the public and media to follow the shell-and-pea game of cheap land, tax abatements, cash grants, and other transfers of their money. Few projects would be funded if all benefits were translated into public cash on the table for voters to approve.

That’s why business subsidies don’t make sense for any city.

Why are they especially inappropriate for Iowa City? We don’t need them. We’re not in a 1930s depression with boarded-up store fronts and 40% unemployment. Our economic growth is satisfactorily driven by entrepreneurs, investors, venture capitalists and banks – plus the University.

We’re one of America’s top ranked cities by virtually any measure.

Have a little self-confidence, City Council candidates. It makes us less attractive, not more, to tell the world we, too, have to offer bribes.
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Nicholas Johnson teaches at the University of Iowa College of Law and tackles TIFs and other controversial issues at http://FromDC2Iowa.blogspot.com.

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Note: This column appeared on a two-page spread containing the Press-Citizen's endorsements, and statements by the candidates, in an Iowa City City Council primary, October 9, 2007. For links to the 12 items on those two pages today, October 3, check out the Press-Citizen's index to its opinion pages.

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