Municipalities often own and operate businesses in direct
competition with the private sector. According to the Michigan Golf Course
Owners Association and Mackinac Center research, about 91 Michigan golf courses
are owned by various units of government, including seven owned by state
Government golf is unnecessary, unfair to private
entrepreneurs and needlessly expensive. Proponents claim that government golf is
necessary to ensure access to low-income duffers (and others), preserve green
space and even generate income. Their arguments are belied by a host of evidence
both anecdotal and empirical. Government golf courses hurt taxpayers and the
owners of Michigan’s 823 privately owned golf courses.
Government golf is unfair to people who have no interest in playing the game but are forced to subsidize it with their taxes.
There are 22 government-owned golf courses in Oakland County
— more than any other Michigan county — including one owned by the city of
Detroit (Rackham). Oakland County is one of the wealthiest counties in the
nation, which makes it difficult to argue that these courses are needed to keep
the game affordable.
Oakland’s $13.4 million Lyon Oaks Golf Course in Wixom opened
in 2002. According to county officials, the acquisition of land for the course
and park was made possible through three state grants worth $2.4 million, and
the construction was financed through the parks department’s capital improvement
fund. Construction of the clubhouse, pro shop, and banquet and meeting space was
financed with $5.1 million in bonds.
Competition from government golf courses is a frequent
complaint among owners of privately owned courses. Consider two major problems
with government golf.
First, government competition is unfair. A municipality may
build or subsidize a golf course with tax dollars taken from the private course
owners they compete against. In addition, the government often has the option of
assigning workers paid by one department to a municipal golf course run by
another. Government golf courses are also not saddled with property tax burdens.
One former owner of a golf course in Commerce Twp. stated
that he paid $200,000 a year in property taxes while the local municipal courses
paid nothing. This made competing difficult enough, but his government-owned
competitor also ran $10 specials for 18 holes of golf. He was effectively driven
Among owners of golf courses in Southeast Michigan, Lyon Oaks
Golf Course is a frequent topic of conversation and criticism. The most common
complaint of this particular facility is its size and high quality, including
amenities like its state-of-the-art clubhouse.
In the past, private owners have been able to better
differentiate their golf courses from government ones by providing superior
courses and other amenities, but Lyon Oaks strips away that comparative
advantage. Municipal courses have also been adding beer and liquor sales to
their services, giving customers another reason to choose government golf over
Government golf is also unfair to people who have no interest
in playing the game but are forced to subsidize it with their taxes.
Second, government golf is unnecessary. Interest in the game
has waned in recent years and some courses are closing simply due to
Empirical evidence suggests that the sport would benefit if
government stayed out of the business. In the 2004 edition of "International
Journal of the Economics of Business," a study by Stephen Shmanske — economist
and author of the book, "Golfonomics" — assessed the impact of 104 golf courses
in the San Francisco Bay Area between 1893 and 2001. Shmanske found that
municipal golf courses deterred the entry of other courses, and that government
golf reduced the number of golf courses in San Francisco. Shmanske recommends
privatization to increase the number of golf courses and golfers.
In 2006, the Michigan Legislature should draw a legal line in
the sand trap. First, it should outlaw direct competition between government and
legitimate business, as Pennsylvania is trying to do. Second, it should mandate
cost accounting techniques for all units of government operating golf courses so
taxpayers could more easily understand the true cost of the activity.
Government golf is unfair to taxpayers and golf course
owners, and may actually lower the amount of greens and golfers in the state.
Municipal courses should be sold to the highest bidder. Short of that, the state legislature should step in and protect taxpayers and private businesses from future losses and from unfair competition. As citizens and taxpayers, we should be asking ourselves: Is golf one of the legitimate functions of government?
Michael D. LaFaive is director of fiscal policy for the Morey Fiscal Policy Initiative at the Mackinac Center for Public Policy.
This article originally appeared as a Mackinac Center Viewpoint commentary (V2006-04).