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Rocky Gap, rocky road

Originally published in the Frederick News-Post

Economic & Fiscal Policy

by Marta Hummel Mossburg

OP-EDS

Politicians love "economic development." The phrase sounds important and well-intentioned, even when describing massively unprofitable state investments such as Rocky Gap Lodge & Golf Resort.

As George Orwell wrote in his 1946 essay "Politics and the English Language": "By using stale metaphors, similes, and idioms, you save much mental effort, at the cost of leaving your meaning vague, not only for your reader but for yourself."

If only the true cost of Rocky Gap were unclear. The state loses millions of dollars each year on the resort in Cumberland with a Jack Nicklaus-designed golf course and panoramic vistas of the surrounding mountains. And for years it has refused to offload it in the vague hope it could make money as one of five designated locations for slot machines.

As it turns out, no one bid for the location. And instead of reaping millions, it is in dire need of tens of millions in upkeep.

Legislators responded this year to the lack of bids not by demanding the resort be sold, but by slightly lowering the state tax for potential owners to a still staggeringly high 64.5 percent on profits and tweaking the investment terms.

The real question before legislators should have been why the state is in the resort and development business in the first place. A recent audit by the nonpartisan Department of Legislative Services questioned for the second time why the Maryland Economic Development Corp. (MEDCO) continues to hemorrhage money on the project without any plan to recoup its losses. As the report notes, the project had an operating deficit of $42.4 million as of June 30, 2009, and "has been unable to pay the debt owed to its bondholders and the state. Amounts owed have continued to accrue and the future of the project is unclear."

Rocky Gap is not the only money-losing project the state finances. The Camden Station renovation, Ocean City Convention Center, and multiple projects financed by MEDCO and the Maryland Stadium Authority cannot pay their way, and are subsidized in the name of economic development. As a specific example, taxpayers forgave more than $400,000 in back rent from the Sports Legends Museum at Camden Yards in 2008 and then cut its monthly rent by two-thirds so that it could stay afloat after giving it hundreds of thousands in aid in previous years.

For a grand tour of money poorly spent, taxpayers can also peruse the millions spent on bond bills each year for museums and other economic development projects that could not survive without taxpayer subsidies.

Clint Eastwood said in "Magnum Force" that "A man's got to know his limitations." The state needs to learn its limits, too. Development is not one of its strengths and should be left to those who know the business and will not be bailed out by taxpayers when they fail -- especially at a time when the state faces $1 billion-plus structural deficits in coming years.

MEDCO should sell Rocky Gap immediately and legislators should turn their attention to making the state's business climate more friendly. Legislators' inattention to what matters makes it no surprise that the state is home to only five Fortune 500 companies, while Virginia has 20, and that Baltimore dropped 50 spots on the Forbes list of Best Places for Business and Careers in the magazine's most recent survey.

Marta Mossburg is a senior fellow at the Maryland Public Policy Institute. mmossburg@mdpolicy.org