Wednesday, January 13, 2010

Honey Creek Money Pit

In July I reported to you on Honey Creek Resort in southern Iowa. I pointed out at that time that, in addition to diverting funds (about $58 million) from other more legitimate government projects, the state was creating a taxpayer assisted entity that would directly compete with private industry. I argued that the jobs "created" at Honey Creek were actually jobs stolen from around the state.

Now the Cedar Rapids Gazette reports that in its first 9 months of operation the resort lost $900,000. A state audit showed that between September 2008 and June 2009 Honey Creek had revenues of $3.1 million but expenses of almost $4 million.

In a separate piece, Gazette columnist Todd Dorman, who visited the resort last summer, said, "Although some lawmakers are talking about pulling the plug on state ownership, I’m withholding judgment until I see how a fully completed resort does this year in a slightly more stable economy." True enough. Plenty of businesses lost money in the last year. Unfortunately I'd be opposed to government ownership of the resort even if it posted a tidy profit, for the philosophical reasons listed above.

Dorman also added the warning: "If the state’s going to own a resort, it needs to think more like a crafty entrepreneur than a drowsy bureaucrat." Here Dorman misses the point. Rather than trying to teach bureaucratic ducks to bark like entrepreneurial dogs*, why not just sell the thing to real entrepreneurs in the private market?

It might be hard to find willing buyers right now, however, since entrepreneurs tend to be more wise with their own money than the legislature is with ours.

*Not every metaphor I come up with can be a gem, people!

1 comment:

  1. I do believe you predicted a bad outcome for this boondoggle when it was first introduced. I'm not surprised. The government could lose money running a cathouse, as they amply proved when the IRS took over Nevada's famed Mustang Ranch. Not that they have any business running a cathouse...or the first place. They can't run the business of state they're supposed to be running.


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