In the coming years expect more of these kinds of discussions in local government. Revenues are sluggish to modest. The recovery is weak. Spending growth in entitlements guarantees a future with diminished economic growth. Pension obligations in many state and municipal governments will crowd out other areas of spending. There will be tax hikes proposed and there will be spending cuts proposed and someone is not going to like them.
Is there a rational way to make cuts that satisfy all voters? Unfortunately, no. Budgets do not reflect individual market exchanges. Without the profit motive, or market prices, making choices on the grounds of economic efficiency is difficult to impossible. V.O. Key’s 1940 discussion of The Lack of a Budgetary Theory gets at this core problem in government budgeting. Budgets are not technical documents. Budgets reflect subjective and political choices.
One criterion to use in determining what belongs in a budget is to limit government spending to only providing public goods.
Amusement parks and amphitheaters do not qualify as public goods. They are club goods. It is possible to exclude free-riders by charging admission. But parks are also non-rival. One person’s use of the facility doesn’t preclude someone else’s. What is telling is how interested parties – those who consider “club goods” valuable to society and worthy of subsidy- respond to the cut.
First consider Playland in Rye, New York. Operated by Westchester County, Playland is one of the few government-operated amusement parks in the United States. It has been so since 1928 after residents decided the expanding hotel-resort-amusement business that had sprung up along Long Island Sound was attracting “bawdy hotels and unsavory crowds.” They asked the county to take it over and reinvent it as a family-friendly park. (An interesting question is how might the community have achieved this outcome without a county takeover?)
With attendance cut in half, a series of recent accidents, and the latest addition of a $30 admittance fee, according to the Wall Street Journal, Westchester County Executive Rob Astorino is seeking to “reinvent the park,” since operating an amusement park, “isn’t an essential service for government to operate…”
There are several bidders offering to take it over, mainly private amusement park owners. One group is non-profit, Sustainable Playland, started by a resident who wants to ensure the park doesn’t become an “over-the-top casino”. She and her husband have raised $150,o00 for their proposal to revive Playland as a public-private partnership.Their proposal involves a combination of park profits, government grants, and debt.
Now consider the Lubber Run Amphitheater in Arlington, Virginia. Built by the county in 1968, the Amphitheater was found in 2010 to be in violation of federal and local regulations including the Americans with Disabilities Act, floodplain requirements, Chesapeake Bay Preservation Act requirements, and building codes. The county cut of funds last year due to budget constraints and allocated $10,000 for summer events in 2010.
Their discussion board sheds some light on the subjective nature of budgets. Most posters insist the Amphitheater is a priority because they have used and enjoyed it. Posters wonder why the Newseum in Rosslyn got $15 million or why the county is subsidizing low-income housing. In their eyes these are lower or equal priority items.
But there is the crux of the matter. What is a priority of government when the government is choosing to spend funds among a whole list of non-public goods? The priority is determined by the most successful special interest.