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Baltimore poured $300 million into a hotel that has recorded more than $50 million in operating losses.

Tuesday, April 1, 2014

Wall St. Journal– Steve H. Hanke, Stephen J.K. Walters, March 21, 2014

…[P]roprietors of a sports-themed chain restaurant called the Greene Turtle recently built a rooftop bar…according to the Baltimore Sun, $505,000 of the $890,000 cost came out of taxpayers’ hides as low-interest government loans, much of which will be forgiven if the enterprise meets modest “employees added” targets and stays open five years…

…[A]t the grand opening on Jan. 2 Maryland’s First Lady, Katie O’Malley, presented a governor’s citation to the bar’s proprietors, who happened to be childhood friends…

…In 2006, Martin O’Malley —then Baltimore’s mayor, now the state’s governor and a presidential aspirant—decided that the Baltimore Convention Center needed an adjoining hotel. Private investors disagreed, so City Hall “invested” $300 million to enter the hospitality industry. Since opening its doors in August 2008, the Hilton Baltimore—city-owned but managed by the global hotelier—has recorded more than $50 million in operating losses…

Meanwhile, the nonpartisan Tax Foundation reports that a net of 66,000 residents and $5.5 billion in taxable income fled Maryland in 2000-10.

Our Response & Your Comments

We rarely venture east for our tales of government buffoonery, but here Baltimore provides lessons for every state, county and city.

Banks are pretty darned good judges of who should get credit and who shouldn’t. That’s because they have skin in the game – their own money. Governments are lousy at it (see “Solyndra”). The only skin they have in the game is yours. Moral: If banks won’t make the loan, government shouldn’t.

Governments are made up of politicians. Politicians need to get re-elected or re-appointed. So they need votes. It takes money to get votes. Moral: even the most honest ones are tempted to give rewards to get money.

For every government winner there’s a loser. Winners are too often “childhood friends” (see above), brothers-in-law or golf buddies. Losers? Whoever didn’t get that contract and,

ultimately, you the tax payer.


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