Michael Hicks is the George and Frances Ball Distinguished Professor of Economics and the director of the Center for Business and Economic Research at Ball State University. His column appears in Indiana newspapers.
With schools in Indiana now releasing students for summer break, pools and parks across the state have become busy. Like many other Hoosiers, my family makes good use of public and private pools and park facilities. As a parent and frugal taxpayer, I have been delighted to support both private pools and public pools and a new sports facility in my town. I’ve also enjoyed those in other places across the Midwest as my kids compete in swim meets and soccer matches. As an economist, I often find myself explaining the role of these types of facilities in local economies.
First off, I should admit that some of my colleagues would rather the government stick to more basic activities than providing pools and parks. I would agree that government should be good at its primary mission and not dabble in private sector activities. However, some recreational infrastructure is an important part of a local government mission. I believe the seminal thinker on markets, Adam Smith, would agree with me and would point to his well-known argument for a progressive toll to fund bridges for inspiration.
But, even if I am wrong, the cost of a public park or pool would count as modest government overreach, amounting to the cost of a mile or two of repaving or a fraction of tax abatements each year. That leads to my second point.
The operation of pools and parks is unlikely to be profitable in the sense that entrance fees will cover the cost of operations and maintenance. I write on this matter not only as an economist, but also as a citizen who played a very small role in the opening and operation of a public pool in Muncie in 2011-12.
A local swim team, whose board boasted experienced business leaders, operated the pool under city contract. During the one full season in which the pool was open, a year of record heat across Indiana, with many hundreds of volunteer hours from parents and the pool manager (an award-winning middle school math teacher and swim coach), we managed to cover our operating expenses with only a bit left over. That amount fell well short of paying maintenance or energy costs.
I feel confident that this same reality plays out across the Midwest, where dozens of municipal pools and parks operate with just enough margin to cover the costs of lifeguards, the seasonal staff and maybe some supplies. As it turns out, municipal infrastructure doesn’t turn a profit any more than roads or jails. That isn’t why they were built.
The real purpose of municipal recreational facilities, especially for kids, is to provide benefits that would otherwise be unlikely to accrue to a community. Space prohibits anything like a full list of the health and wellness benefits that can be attributed to local pools, parks and playing fields. This is too short a venue to lay out the economic effects of visitors and sports programs to local businesses, nor will I describe the impact a well-maintained public pool, bike path or park plays on property values. Here I wish to make a different point.
The myriad small ball fields, running paths, and municipal pools comprise an element of public investment many households expect in a community. Thus, they serve not only as a means of providing an outlet for otherwise restless youth, but also as amenities of value to potential residents.
Now, this does not mean every community can afford more of these amenities, nor should anyone excuse poor management of municipal facilities. Not every city can have Madison’s Crystal Beach, Kokomo Beach or Muncie’s Tuhey Pool. The point I wish to make is that turning a profit on community recreational facilities is an inappropriate measure of success. Instead, attendance and overall use might be a much better measure of value to a community than the dollars those visitors bring to the facility.