Wednesday, April 19, 2006

COLUMN -- For public money, must be public benefit

Posted by Craig Westover | 2:18 PM |  

Wednesday, April 19, 2006

I wrote a couple of checks last week: One to cover a parking ticket and one to pay my state income tax. If I had ignored either, I'd be writing my column on jailhouse stationery.

I incurred my first obligation to the state by breaking the law. I "stole" a parking spot. I was obligated to pay my income taxes, however, despite minding my own business and harming nary a soul. That's an important distinction.

Government is the only entity granted the authority to use force to fulfill its purpose. It follows that responsible government should use that force sparingly and selectively to 1) protect citizens from harm; 2) enforce contracts; 3) promote public good.

Reasonable people might argue how well a specific administration is executing Nos. 1 and 2 but nonetheless agree they are legitimate functions of government. Promoting public good gets a little tricky.

Government giveth: Government indeed does things on behalf of the entire community. It rightly taxes people to pay for them. Unfortunately, "public good" has become so loosely defined that it has lost real meaning. Consequently, for the public good, the legislature proposes a billion-dollar bonding bill that includes funding for "necessities" like a ski jump, community centers, zoo exhibits and a volleyball center.

A constitutional amendment is proposed that would raise the state sales tax to fund outdoor recreation and the Minnesota State Arts board, public broadcasting and children's museums in Duluth and St. Paul.

What about the Northstar commuter rail and Central Corridor projects? How do investments requiring perpetual subsidy qualify as a public good? And let's not forget stadiums for the Gophers, Twins and Vikings. Does "psychic value" constitute a public good?

All of those projects are proposed public goods. However, unlike in the private sector, where, for example, Carl Pohlad must persuade me to voluntarily buy a Twins ticket, government need not bother convincing me of the value of a Twins' stadium. It simply taxes me to pay for it no matter how many times I've said "no thank you." I don't pay, I go to jail.

Government taketh away: What is ignored by advocates for public projects is "opportunity cost." In order for government to fund anything, it must first take the funds from someone else. Sunday's Pioneer Press editorialized that for the $840 million Central Corridor project "half of the money would come from the federal government, the rest from the state and Ramsey and Hennepin counties" as if these entities created that wealth. In fact, ALL of the money comes from taxpayers.

That's $840 million that individuals from around the state and the nation will not spend on things they value more than a cool-looking train running down University Avenue. The problem is, city planners can point to colorful illustrations of storefronts and clock towers to make their case for the Central Corridor project; it's more difficult to meaningfully aggregate the real economic loss of individual tax contributions.

The cumulative sales tax a Hennepin County resident pays in a year to build a Twins' ballpark (three cents on $20), for example, might finance a dinner and a couple of theater tickets, which consequently won't be purchased. But I guess that's OK. Instead, simply raise the sales tax to support the arts — tax people who might use their money to, say, watch the Twins in the new ballpark. Good government fixes most of the problems it causes, no?

Define "public good": A public good is not simply what those in power happen to think is cool. Gov. Tim Pawlenty took a step in the right direction in emphasizing the principle that projects in the bonding bill should have statewide or at least regional significance. Libertarian writer Charles Murray poses three more questions that help refine the assessment of "public good":

1. Is the good something that cannot reasonably be provided by the individuals or private sector businesses on their own?

2. Does it ask people to pay for a government service they don't want?

3. Does it significantly benefit some people more than others?

Providing public goods and taxing to pay for them are legitimate functions of government — if carried out selectively. It is not "visceral hatred," as the Pioneer Press characterized conservative criticism of light rail, to question the necessity and therefore legitimacy of "public goods." Nor is it too much to demand criteria by which to judge that necessity. After all, the consequences are greater than those of a parking ticket.