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Thursday, August 6, 2009

Lake County Justifies Doubled Deficit to Fund LAIC

Elisa Sand appears to be as surprised as I am that the Lake County Commission gave the Lake Area Improvement Corporation a $25,000 handout on Tuesday. I'm further surprised that her surprise seems to evident: after all, she's a professional journalist!

Our cause for surprise is much greater than the increase of funding that I mentioned yesterday. As Sand points out, the county's gift to the LAIC doubles the county's deficit:

Faced with a provisional budget showing expenses still $27,749 above projected revenues, Lake County Commissioners made an unprecedented move on Tuesday that nearly doubles the deficit.

Lake Area Improvement Corporation Executive Director Dwaine Chapel appeared before commissioners to discuss a last-minute request of $25,000 for 2010 operational costs, which was approved [Elisa Sand, "County OKs $25,000 to LAIC," Madison Daily Leader, 2009.08.05].

According to Sand, Chapel teased commissioners with mention that the LAIC is "in the middle of negotiations with an agricultural business and has just started talking with a technology company." Of course, since the LAIC prefers to do everything behind closed doors, there's no way for us to verify such claims or see just how likely it is that our money will produce results in this direction.

But we can trust LAIC executive Dwaine Chapel, right? He understands the economy, right?
Well, when he tickles us with this counterfactual assertion, I'm not so sure:

"Gehl isn't going to close, in my opinion. They're still strong with good sales," he said [Sand, 2009.08.05].

Which Internet does Chapel read? Gehl owner Manitou Group reported a 50.7% drop in sales over the first six months of this year. The same article says equipment sales and industrial subcontracting dropped 59% due to slowdowns in the U.S. building and agricultural markets. This Russian article says Manitou's Q2 sales were actually up 15% from Q1. The Russian article also says Gehl's sales were down 73%. And Gehl's sales forecast is being revised downward for the second half of the year. Ugh.

Now the main mission of the LAIC is to create jobs. Lake County currently has one of the highest unemployment rates in the state. Nonetheless, Commissioner Chris Giles justified giving the LAIC some of our money by saying that the LAIC is helping us tread water:

"We would be in much worse shape without the job creation taking place," Giles said. "Without that, we would be down a couple hundred more" [Sand, 2009.08.05].

Even Giles wasn't ready at first to drop the full $25K the LAIC requested in Chapel's outstreched hand. From Sand's account, Giles seemed inclined to go with something closer to the county's historical average contribution to the LAIC of $16K. But Commissioner Bohl started the bidding at $25K and suggested the county ought to do even more.

The commission unanimously approved the $25K handout. No strings, no accountability, no expectation that LAIC report exactly how it used that money and identify the specific return on that investment. And for added budgetary interest, no such cash available in existing revenues. The LAIC's money will come either from budget cuts in other areas or spending rom cash reserves.

Now I usually don't go partisan on our county commissioners. Party politics have about as much to do with paving the roads and catching drunks as a screen door does with the effective operation of a submarine.

But do note the elements of this story:
  1. A government doubles its deficit to throw money at an economic stimulus effort with unproven results.
  2. An agency makes unaccountable, untransparent use of taxpayer dollars.
  3. In the midst of the highest unemployment in decades, an economic development effort is praised for keeping us from being in worse shape than we are.
I think I hear some Republicans saying just those sorts of things as criticism of the Obama Administration. Yet at the local level, the main players mentioned in this LAIC story—Giles, Bohl, and Chapel—are all Republicans.

Now I haven't heard Giles, Bohl, or Chapel take positions on Obama and the federal economic recovery effort, so I won't accuse them of hypocrisy. But I will note that the county's reasoning on funding the LAIC and the LAIC's willingness to accept such handouts further demonstrate that Republicans in Lake County have very little ground on which they can criticize the policies of the Democrats in Washington.

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