Arizona taxpayers may fund theme park boondoggle

Via an email from Tom Jenney of the Arizona Federation of Taxpayers comes a warning about SB1450, a bill that would subsidize the construction of a theme park -- and leave Arizona taxpayers on the hook for the cost:

Dear Arizona Taxpayer:

Right now, members of the Arizona Senate are considering whether or not to award a private company the privilege of issuing $750 million in tax-free bonds, so that it can build a rock music theme park in Eloy.

If the project turns out to be a flop, and if tourists fail to come to Eloy in sufficient numbers, the state could have to pay back creditors, or it could jeopardize its bond rating, making it more expensive in the future to borrow money for traditional projects, such as road construction.

But the economic downsides of the Decades Theme Park deal are not nearly as important as the question of principle at stake: whether or not the government should not be handing out special privileges to chosen companies. The answer to that question is clearly, “NO.” The government should not be in the business of picking winners and losers in business.

Like so many bills, SB1450 doesn't explicitly say who it's intended to benefit. Instead, it allows the creation of a "regional attraction district" by "a city with a population of more than ten thousand but less than twenty thousand persons that is located in a county with a population of more than two hundred fifty thousand persons but less than three hundred fifty thousand persons." That's pretty carefully crafted for a targeted beneficiary. Once established, the regional attraction district will have "all of the rights, powers and immunities of municipal corporations."

Writing about the theme park scam in the Tucson Citizen, Byron Schlomach, director of the Center for Economic Prosperity at the Goldwater Institute, said:

In a nutshell, this private business would be financed as if it were a municipality, county or the state, getting all the tax benefits that come along with that. Needless to say, most businesses in Arizona don't get these sorts of benefits.

The adoption of this proposal would allow the state to favor one business by lowering its investment costs and not doing so for other businesses. Arizona's constitution has several provisions to prevent these types of deals. The Goldwater Institute has filed a lawsuit against the city of Phoenix to prevent it from offering a sweetheart deal to a mall developer.

This project also does present a risk for all Arizona taxpayers.

If Decades' owners default on their "government" bonds, Arizona's legitimate government bond ratings could suffer. All of these creative financing schemes for private businesses that cities around the state continue to offer beg one question: If we are so desperate to help businesses open in Arizona, why don't we lower costs for everyone? If costs are too high, then cutting business taxes is the way to address the problem.

Since the state senate is considering this scam right now, it's a good time for my Arizona-based readers to contact their senators with the message that theme parks really should sink or swim on their own merits, using their owners' money.