Wednesday, June 21, 2006

Bend over Sweetheart

A fundamental problem with governments providing and subsidizing goods and services is the indirect connection between the desirability, necessity and quality of the service and the pocketbooks of individuals who are paying for it. The collective wallet is controlled by a small group of goons, supported by people who believe they are unfit to make their own choices but who also believe the super hero they elect will make the trains come in on time. The result is that unwilling citizens are forced to subsidize their neighbour's entertainment as they bleed to death waiting for medical treatment.

A profligate spender suffers the consequences of his own irresponsible choices, unless he chooses to pass off some of that responsibility by joining the welfare line. And frugal citizens suffer the consequences of their profligate governors who walk away from the crumbling mess they've helped create with their larders full and their special interests satisfied.

Lfpress:

Battle lines are being drawn over a move to extend the Western Fair Association's "sweetheart" rent deal with the city by 13 years.

After spending $47 million on expansions and improvements in the last five years, fair officials say cash is tight and revenues lag projections.

So they've asked the city to extend a lease that pays the city about $200,000 a year -- less than half the fair market rent estimated in 2004 at $470,000 a year for 18 hectares of city land -- to 2019.

A staff report recommending the extension goes to board of control today.

"They're swimming in debt and therefore they're not able to pay fair market rent," said Ward 7 Coun. Paul Van Meerbergen. "Frankly, it's the taxpayers of London taking the hit. We have an asset and we expect to have a proper return. We should not be subsidizing the Western Fair operation."
The number of pothole related injuries is on the rise, and sections of the city are drowning in raw sewage, yet council adds the Western Fair Association's plea to the wishlist. Sounds like the Fair runs their business much like the City of London:
Western Fair Association general manager Gary McRae said the organization doesn't have the money to increase lease payments.

"Yes, we're successful and making money, but we've taken on some large debt commitments," he said.

McRae explained the fair is paying $3.2 million of its annual surplus -- last year, it was $3.8 million -- to repay a $28-million debt to build a new race paddock, Agriplex and larger grandstand, expand parking and add more slot machines.

As well, McRae said the fair needs about $1 million a year to maintain its properties.

Meanwhile, slot revenues are $2 million less than projected when the number of machines was increased to 750 from 300.

The debts will be paid within nine years, which McRae conceded could be spread over a longer period to reduce payments.

"We'd like to gain some cost certainty," he said.
A grasp of basic economics is what you need buddy. McRae and his supporters go on about the value they contribute to the community, but the reality is taxpayers are assisting a business that cannot balance a budget and manage a debt.

I've never been to the Western Fair, because I hate crowds and circuses, so why should I help pay for it? Frankly, I'd rather clean my cat box with a toothbrush than give the Fair even more cash to piss away. Why doesn't the city give me a rent subsidy so I can purchase more wine? That's good for the community too, because I'm happy and more productive in direct proportion to the amount of wine consumed.

Update: The Board of Control has rejected the Fair Associations initial proposal. This does not however mean that they won't get something as a result of their whining.
In a later interview, McRae hinted at resentment on the fair board.

"We have many people on the board who don't feel we should be paying rent," McRae said. "It seems like a back-door way of collecting property taxes."

Ontario's Agricultural Act exempts fair associations from paying property taxes. Without the exemption, city staff estimate the fair would be paying upwards of $900,000 a year to the city.

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