Wednesday, August 05, 2009

The Battle of Sligo Creek Golf Course, Part Three

There are several misconceptions about the Battle of Sligo Creek Golf Course. Let’s deal with two big myths right now.

Myth #1: Sligo threatens the solvency of the Revenue Authority.

The Montgomery County Revenue Authority (MCRA) turned back Sligo, one of four courses it leased from Park and Planning, on the grounds that it was “adverse to the entire golf system.” Former County Council Member Steve Silverman, who oversaw the drafting of the lease between MCRA and Park and Planning, defined that term in his remarks on the day the council approved the lease:

The threshold test is not that a particular course is losing money but that, in fact, it is the loss of monies in connection with one of the golf courses is adverse to the entire golf system which means in effect, it has the potential for taking the entire golf system. Under those circumstances, the tenant could take that Park golf course and return it to Park and Planning.
The consultant’s report that MCRA relied upon to turn back Sligo (starting on page 24 of this council briefing document) did show that Sligo was losing money. The report calculated Sligo’s net income (including depreciation) as $38,427 in FY 2006, -$100,697 in FY 2007 and -$168,358 in FY 2008. But the report also projected that MCRA’s nine-course system would earn positive net income even with Sligo in it of $187,203 in FY 2009, $255,178 in FY 2010, $322,914 in FY 2011, $390,210 in FY 2012 and $456,843 in FY 2013. The report knocked Sligo’s need for capital investment, but admitted, “Little Bennett does provide the most direct economic loss of any facility in the system.”

MCRA’s own consultant shows that the golf course system is solvent and will be consistently profitable even if Sligo continues to lose money. Little Bennett’s losses ($309,071 in FY 2007 and $326,462 in FY 2008) are double to triple Sligo’s losses and pose a greater problem to the system.

In any case, MCRA is not a private-sector business that should seek to maximize profit. Rather, it is a custodian of public assets. It is time for MCRA to remember its mission.

Myth #2: Sligo needs taxpayer subsidies to survive.

Some people are asking, “Why should we spend taxpayer money on golf?” The answer is that we don’t have to.

Advocates on all sides of the Sligo issue must understand that the county’s budget problems are real. The county is facing a $370 million deficit next year, the third tough year in a row. County employees gave up their cost of living adjustments this year and may have to do it again. The County Executive is recommending furloughs. The state budget is in terrible trouble and the Governor will be announcing more cuts before Labor Day. Some of those cuts may affect state aid to the counties. And the Gazette reports that a handoff of teacher pensions from the state to the counties, a proposal that would disproportionately devastate Montgomery County, is a real possibility.

The above constraints generate real questions of equity in allocating public funds. Golfers who do not patronize Sligo have legitimate reason to question why their tax dollars should be spent to support just one golf course while the others are expected to pay for themselves. Many people do not play golf and would prefer protecting their schools and public safety services. A gigantic coalition of minority groups fought against social services cuts last spring. Will they now support spending tax dollars for golf as the budget grows worse? Under these conditions, any politician who advocates re-initiating taxpayer subsidies for golf while at the same time cutting school, police and social spending risks getting called a limousine liberal in the next election.

But these problems are rendered moot if MCRA takes back Sligo. As we have shown above, their own report states that their entire system can continue to make money even if Sligo loses it. Given that fact, taxpayer support is unnecessary.

We’re not done yet. We’ll debunk Myth #3 in tomorrow’s conclusion.