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Commonwealth Foundation


Government-Run Golf a Taxpayer Double Bogey

by John Bouder
 

As the current economic stagnation sees cities and counties struggling to maintain basic services, what are some local governments still pouring money into? Golf courses, of course–with Pennsylvania taxpayers constantly chipping in and plenty teed off.

Believe it or not, local governments, i.e., taxpayers, own 49 golf courses in Pennsylvania. One of the poorest performers is Dauphin Highlands Golf Course, owned by Dauphin County taxpayers, which simply doesn't make enough money to cover the interest on its debt. For years, county taxpayers there have been caddying for the course's bills to the tune of more than $3 million. The golf course is for sale, but because its $11 million debt load exceeds its market value it has become a sand trap the county cannot escape.

Unfortunately, Dauphin County's golfing misadventures are becoming par for the course. Sadly, the handicap is no better in Middle Smithfield Township where officials are facing a major loss on the Country Club of the Poconos, costing local taxpayers nearly $1 million from 2010-11. While true that not all municipal courses are failing so dramatically, few have proven to be the money makers local officials promised.

Naturally, if private golf courses fly into a fiscal bunker, their only recourses would be to close down, adapt or change management. Not so with government-run courses as they can always go to taxpayers for a subsidized sand wedge. But with families struggling to make ends meet and local government looking at tax increases or program cuts, taxpayer golf is a budgetary double bogey we just can't afford.

In contrast, Dauphin County sold off its Donald Ross Golf Course in 2002 and avoided the massive debt that buried Dauphin Highlands. For municipalities unable to sell their courses, managing them in partnership with private sector companies is the next best option. Public-private partnerships enable private sector firms to run all or part of a government-owned property, lowering costs, minimizing risk, and enhancing services.

Many municipal courses already lease on-site restaurants to local small businesses with great success. Landscaping and building maintenance are other areas ideal for public-private partnerships. Alternately, larger companies that specialize in golf course management can take over operations wholesale and increase revenue in ways city governments can't.

One such company, Billy Casper Golf, owns or operates more than 127 facilities in 27 states, including seven in Pennsylvania, and uses economies of scale to drive down costs. The City of Tulsa, Oklahoma, partnered with them on two failing courses, and net operating income grew by more than $1 million in less than two years. Tulsa's growing liability was converted to a budgetary birdie for the city while enhancing the golf experience for the average player.

Ultimately, private sector companies consistently perform more efficiently than their government-run counterparts. Based on a review of more than 100 studies, the Reason Foundation conservatively estimates savings from privatization at 5 to 20 percent. Under private management, golf courses boost the number of rounds played, purchase equipment in bulk, pay market rather than inflated government wages, and invest in and expand their offerings. Municipalities tend to put off needed repairs and improvements during a budget crunch, alienating customers and creating a future crisis.

But let there be no doubt, the best way for municipalities to avoid risking another Dauphin Highlands debacle is to stop competing with the private sector for golfers' business in the first place. Government intrusion is handicapping the golf business by forcing private golf club owners to fund their own competition via taxes. And for non-golfers everywhere, please ask yourself why your government is forcing you to subsidize a luxury game service used by less than 11 percent of the population.

Unfortunately, municipal golf courses are only one example of the many private industries governments compete with every day. In these difficult economic times, if a business can be found in the yellow pages of a phone book, government shouldn't be the owner unfairly competing with private enterprise by using taxpayer dollars to hire and manage public employees. Before local governments concede the hole they have created, it's time taxpayers get a monetary mulligan by ending subsidized golf.

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John Bouder is a research fellow with the Commonwealth Foundation, www.CommonwealthFoundation.org, Pennsylvania's free-market think tank.


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