In defense of private solutions

From time to time I come across a local issue that perks my interest. An article on the front page of the Times Record News today reported that the owners of the local Castaway Cove water park would like the city to assume ownership. I could not disagree more with this idea.

This water park was built shortly after I arrived here in Wichita Falls over six years ago and opened in June 2004. Somehow, the owners have accrued over $4 million in debt despite annual gross revenue of $1.4 million. The article did not comment on their expenses or net revenue which I assume is negative since they want the city to assume its ownership. Why sell something that is generating profit?

The article also states that despite a total investment of $8 million over the past five years the property is valued at $10 million. So what's the problem? Why not put it on the open market for another individual or private entity to buy? Maybe this is too simple, but consider an offer of $5 million...the current owners could pay off their $4 million debt with change to spare, and the new owners would acquire it at half of market value. Why go to the city first?

One reason for the city-first option may be the short fuse; the owners say they will have to permanently close the park after it closes for the summer on Sunday September 13th. Are the owners not essentially looking for a bailout? Hmmm...where would they get the idea that the government could bail them out? The city recently made plans to take a federal grant to beef up our police force. Could it also be that much larger companies such as GM, Chrysler, AIG, etc., when faced with financial ruin, went straight to easy money Uncle Sam instead of the harsh but efficient open market via bankruptcy?

The last column of the article details how much of an asset this park is to the city in terms of attracting local residents, both civilians and military from Sheppard AFB, business parties, out-of-towners, tourism, etc. These will probably be some of the selling points made to the city council on Tuesday September 15th. Well, if the park is such an asset to the community, then why is it losing money? The same management group is slated to continue managing it if the city assumes ownership. If the park is losing money under their management, is this a good idea? No, it's worse. Whereas only private investors are losing money now, we the city residents would be losing money if the city assumed ownership. Have the owners considered all private, market options? Have they even considered new management? On this point, the article is silent.

Whenever government at any level assumes control or ownership of a private business, all residents of that city, county, state or country assume its liability against their will. Whenever a business or industry is profitable, investors will be attracted to the same, or repelled if unprofitable, by their own choice, i.e. they still have recourse.

That government entity, in order to get our vote or approval, will tell us that profit (assuming any is even made) will be earmarked for debt reduction, supplementing budgets or allow for tax cuts or at least lower future tax increases. That sounds good, but since when does any government run anything efficiently enough to make a profit? The feds have nearly $12 trillion in debt now and the big three entitlement programs have a present value of $50 trillion in unfunded liabilities and commitments.

We live in a time where cities, counties and states look for bailouts from Uncle Sam who can constitutionally print money out of thin air or borrow it from China. Whenever an individual or family spends more than it makes, they will eventually face a day of reckoning. When will that day come for our federal government, and who will bail them out? Whoever it is will have no recourse unless they leave the country.