Monday, August 30, 2010

Massive . Government . Failure

We read about Canajoharie today, how its residents are facing a $2,700 annual increase in fees and taxes now that the Beech-Nut plant, through a heavily taxpayer-sponsored "economic development" program, has left town for a new site 20 miles away.
An audit released earlier this month by state Comptroller Thomas DiNapoli found that Beech-Nut used 86 percent of the village’s water and wastewater treatment facilities, and provided 11 percent of its general fund tax revenues.

To offset Beech-Nut’s loss, auditors said each household could see an increase of $2,700 in taxes and water and sewer bills for years to come.

DiNapoli called that “unsustainable,” adding the village has sought help from larger levels of government with no success.

The amazing thing about this is that significant impacts on Village water and sewer rates were forecast at least two years ago when the move was still being discussed.  Why was this not taken into account and dealt with when the State and Montgomery County officials were putting together their package of incentives for Beech-Nut to move  to near Amsterdam?

Earlier, why was this situation even allowed to develop where an entire village became enslaved to providing water and sewer facilities to such a large user?  Those services are under State supervision, where there are "experts" who should be looking at these issues.  Using 86% of the water/sewer plant capacity, Beechnut should have been the owner of those facilities, not the taxpayers.  Ownership would have been an incentive for them to stay put.    

There are two lessons to be learned: (1) Government and businesses should not be partners.  (2) Government ineptness creates most of our economic problems.

This is a massive failure of government ... a village government that should never have been expected to provide water and sewer services for such a large user, state government which mandates the water and sewer facilities that are needed, and state and county governments who are so focused on 'jobs' that they do not understand the larger impacts of what they are doing.


Anonymous said...

"Why was this not taken into account and dealt with when the State and Montgomery County officials were putting together their package of incentives for Beech-Nut to move to near Amsterdam? "

Probably because very few people understand the difference between job creation and urban sprawl (or regional sprawl in this case). The new site probably advertised it as creating jobs. So all the voters supported the "new" jobs coming to the area. The state could care less as long as it works out some plan to generate fees. The other government just assumed that the beech-nut would stay and never bothered to do much to keep them there. And Beech-Nut probably wanted to pay less in taxes and was going to go there, regardless.

Dave said...

I'd want to see more detail before making a judgment. I have lived in towns (Geddes, Endicott) where a company was "86% of the customer base," but that brought residents heavily discounted utilities, at least at the time.
But the whole idea of taxpayer-sponsored benefits to businesses to get them to stay, or in return for jobs, bothers my conservative soul. And in the long run seldom accrues any benefit to taxpayers, would be my guess.