Sacramento’s arena task force has come out with its job creation estimates for a new Kings arena, and the survey (by Sacramento consultants Capitol Public Finance Group) says … 229 permanent jobs. For a $300 million building, of which no one is saying how much would be paid for with public funds.
I’ve been pretty critical of the Sacramento Bee’s reporting in the past, so I give them full credit now for doing what too many newspapers don’t, and actually trying to assess what economic impact projections actually mean. In this case, the Bee rang up Stanford economist Roger Noll, who didn’t mince words:
Stanford University economist Roger Noll called the report “remarkably honest” but said it doesn’t bolster the case for a new arena.
“Two hundred jobs is nothing,” said Noll, referring to the permanent jobs the report estimates would be created. “You induce Macy’s to open another store and you get that.”
A critical issue, Noll said, is how the arena is financed. If taxpayers pay the bulk, that takes dollars out of their pockets, blunting at least some of the economic benefit. “How much are you willing to pay to get 200 jobs?” he asked.
To try to put some actual numbers to this: If the public put up all $300 million of the arena costs (even assuming the arena only costs $300 million, which seems low by recent standards), that would come to $1.4 million spent per new job created — in a job development world where anything over $50,000 per job qualifies as “execrable.” And as for the issue of taking dollars out of local pockets, recall that when Kansas City was first proposing using tax money to pay for stadium renovations, it was calculated that a three-eighths of a percent sales-tax hike would cost each local resident $25 a year. Now that’s something that should be included in every economic analysis — or at the very least, in newspaper coverage thereof.