By Christian Britschgi : reason – excerpt
These subsidies were a bad deal for taxpayers even in good times. In the midst of a global pandemic, they’re devastating.
The COVID-19 pandemic has devastated the hotel industry, and in doing so put the taxpayers who funded generous incentives for these hotels at risk of never being paid back.
This week, The New York Times reportedon publicly funded hotels from around the country that are having to delay openings, or sitting empty thanks to coronavirus-related shutdowns and cancellations…
That’s because targeted subsidies for things like stadiums and hotels don’t make economic sense even in good times, says Michael Farren of George Mason University’sMercatus Center…
“Targeted economic development subsidies don’t work. They don’t actually raise the standard of living in the communities that use them,” he tells Reason.
Farren says these kinds of incentives, at best, spend scarce public dollars on economic activity that would have happened regardless of the subsidies offered. That’s a loss for local businesses and residents who have to pay these taxes but don’t receive any of this largess, he says…
Now both types of investment are losing money at the worst possible time. Local governments are under tremendous financial strain as sales taxes they rely on evaporate, and the demands for all forms of public services grow.
This would be the case regardless of whether governments had splurged on dubious economic development projects. It nevertheless means that cities across America are having to divert money from providing essential services to cover the costs of luxury hotels…(more)
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