Friday, March 02, 2007

MOA handouts 

I had completely missed Captain Ed's shout-out for help on the Mall of America subsidy being pitched by its owners to the state Legislature. The owners are asking the state to build a $180 million parking structure plus another $20 million in infrastructure investments. I became aware of it when Stephen Spruiell at National Review called for comments last night, which he published this morning. I said:
King Banaian, chairman of the St. Cloud State University economics department, is skeptical. �Let�s think about this: Mall of America is huge. So, we�re going to make it huger, and somehow more people are going to come to Mall of America?� Banaian tells NRO. �The marginal gain in [sales tax] revenues is likely to be pretty small.�

Banaian says the mall�s request is easy to understand when you look at the context: �There�s a small surplus in the budget right now,� he says. �Everyone wants to ask about their favorite project.�
(I can hear the screams from the Legislature now -- THERE'S NO SURPLUS!!!! WE HAVE TO FACTOR INFLATION!!!! STOP ASKING FOR MONEY!!!! -- but the fact remains that the inflation dodge is just a way to protect existing tax consumers from encroachments by outsiders to the trough.)

I don't believe there's a bill in the Legislature for this yet, though the AP reports that Senate Tax Committee chair Tom Bakk plans to introduce it. "Bakk said the project would mean 10 million to 15 million man hours of construction work..." I suggested to Spruiell that if Sen Bakk wants to help out the construction industry, the workers might prefer $200 million in cash handouts plus the 10-15 million hours to do something else rather than $260-$390 million in wages (before taxes) and none of those hours. The additional jobs generated in the retail sector pay on average $320/wk. for 30 hours of work -- if there are health benefits in there, I'd be pleasantly surprised. (Source for wage/workweek data.)

It's interesting -- and I think pretty good reporting -- that the MOA handout was contrasted to the handout being sought by Thomson West. Those are better paying jobs, the claim is made, and that is indeed true. But if the jobs are worth that much, why should taxpayers subsidize the building in which the employees earn it?

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