Center for Community and Economy Newsletter – Jan. 19, 2012

1. Big Government in Little Cities

By Derek Monson

Any level of government, if not watched over carefully by responsible citizens, can become a hotbed of big-government thinking. Often conservatives’ attention in this regard is focused on state or federal government, concerned (and rightly so) about a top-down attack on freedom. However, because city and county governments tend to get less attention, it makes them quite vulnerable to the illusory promises of big-government thinking.

In other words, while a top-down attack on freedom is a real concern, if communities do not pay attention to their local governments we are as likely to lose our freedom from the bottom up.

For instance, the Spanish Fork City Council recently made a special deal with Costco, worth more than $2 million, to persuade the wholesaler to build a store within city limits. The deal includes paying the sales taxes to Costco that the city collects from the store’s shoppers for 18 months (up to $1 million), not charging Costco for city utilities like water and sewer services for four years – despite the added utility costs that Costco’s store will create ($1 million), and waiving the construction-related fees that Spanish Fork charges other businesses.

What makes this an especially sweet deal for Costco is that the city chose not to grace Costco’s Spanish Fork competitors (Macey’s and Fresh Market) with similar privileges. In other words, the city gave Costco taxpayer-backed (and in the case of city utilities, taxpayer-funded) competitive advantages while basically saying “tough luck” to Costco’s competitors.

Just as astounding as the city picking Costco as a “winner” and Macey’s and Fresh Market as “losers,” at taxpayer expense, is the justification of this blatant manipulation of the free market offered by Spanish Fork city officials: “We are leaking sales tax to other cities,” according to an assistant city manager in Spanish Fork. Further, in response to public opposition about giving special breaks to Costco, the same official responded, “We recognize that even though it may not be something that the public wants … we recognize that it’s a necessary part of doing business in helping our local economy grow.”

Consider this reasoning for a moment. Spanish Fork residents are choosing to shop at stores outside Spanish Fork (horrors!), which to city officials means that they are not sucking up every sales tax dollar available from city residents. To Spanish Fork city officials this constitutes a “problem,” and based on this “problem” the city feels justified in creating a whole new set of special rules for Costco and, in essence, penalizing other similar businesses that are playing by the old rules because they are not as politically favored as Costco. And while some among the public may object, we should side with the “experts” in government who actually understand the issues.

This, my friends, is big-government thinking at its worst. We start by manufacturing a “problem” (deficient sales taxes), and then create a public policy to solve that “problem” which relies primarily on government for the “solution” (the Costco incentive deal) – making sure, of course, that the policy increases the size and influence of government (more sales taxes) and primarily benefits a favored group (Costco). And now that we’ve used government to scratch the backs of those we like, we’ve made life harder for those actually trying to live and work responsibly (Macey’s and Fresh Market), with the side benefit of incentivizing them to seek similar big-government policies to favor themselves, increasing the power of government even more. Whatever public opposition arises, it can be readily dismissed because we are the government “experts” and we know what we’re doing, thank you very much.

The Spanish Fork-Costco deal may be one of the more obvious examples of big-government thinking in local government, but it, unfortunately, is not close to being the only one. Cities, counties, and even public school districts across Utah are giving special deals to favored businesses on a regular basis, increasing their influence on the economy and undermining the free market. Further, big government thinking readily finds a welcoming environment in local policy areas such as zoning laws, often in disregard of principles like private property, personal responsibility, and the free market.

The bright side is that most local government policies can be influenced with relatively little organizational and communication effort from responsible citizens. The best hope for countering big government thinking at the local level is for residents to stand up, pay attention, and speak out to local elected leaders for commonsense conservative principles and policies. If we want to defend the cause of freedom from bottom-up attacks, we can do no less.

The author, Derek H. Monson, is director of public policy at the Sutherland Institute. He is a graduate of Brigham Young University, where he earned Bachelor of Arts degrees in Economics and Political Science. Mr. Monson has authored several reports on Utah public policy, includingTransparency in Government – Understanding Why Utah’s New Transparency Law Facilitates Good Government and The Myth of the Silver Bullet: A Comprehensive Approach to Teacher Incentive Pay.


2. Costco Deal Unfair to Other Spanish Fork Businesses

By Matthew Piccolo

How would you like to pay no sales taxes for 18 months and no utility bills for four years? Sounds like a sweetheart deal, doesn’t it? Well, it is for Costco in Spanish Fork. The city has offered Costco, a multibillion-dollar corporation, these special privileges and more for building a store within city limits (see here and here).

I wonder what Costco’s competitors in Spanish Fork think about this deal, especially the smaller, home-grown companies that have operated there for years or decades without receiving any special treatment. …

To read more of this post on the Sutherland Daily blog, click here.


3. Sandy Favors Retailer With 25-Year Tax Break

By Matthew Piccolo

Recently, we pointed out a special tax deal offered to Costco by Spanish Fork. Today, we highlight another deal offered in Sandy to Scheels, a sporting goods superstore, and analyze the rationale used to justify these kinds of deals.

Earlier this year, Sandy city, Salt Lake County, Canyons School District, and four smaller taxing entities agreed to rebate 100 percent of Scheels’ property taxes for 25 years for a new store in Sandy, a deal worth more than $16.8 million. …

To read more of this post on the Sutherland Daily blog, click here.