Vision2: Putting all our eggs in one basket

NOTE: I'll be talking about Vision2 in studio with Pat Campbell and company on 1170 KFAQ, starting at 7:05 a.m. -- Monday morning, October 29, 2012.

On Saturday afternoon, I spoke at the invitation of the Tulsa Community Business Group, an organization that meets monthly to encourage the development of small businesses. During the first part of the program, we heard two small business owners tell their inspiring stories.

Don Walker, president of the Tulsa Metro Chamber, was there to speak in support of Tulsa County's Vision2 sales tax scheme; I was there to represent the opposition. We each had opportunity to speak, followed by Q&A with the audience.

Much of Walker's comments were devoted to defending Proposition 1, with its $214 million earmarked for buildings and equipment to be used by American Airlines and another $40 million for facilities that Spirit Aerosystems and IC Bus are contractually obliged to maintain, specifically including major upgrades and maintenance. (Walker made the odd claim that a different lease puts that same obligation on the City of Tulsa -- if I heard him right. Don't both parties to a contract sign the same contract?)

Prop 1 also includes an uncapped "deal closing" fund -- 70% of the revenues for the fund will be generated within the City of Tulsa, but Tulsa will only have one vote of seven on how it gets spent.

The most striking thing that Walker said was right at the end, and I wasn't given a chance to respond. He said he believes the "Tulsa economy is still somewhat fragile in this current election year and in the marketplace, and I believe it is imperative to send a signal to the aerospace industry that Tulsa is a place to do business."

Had I had the chance to respond, I would have pointed out that Walker is asking us to put the weight of a quarter of a billion dollars on that most fragile part of our economy. If we want to make our economy more resilient, more resistant to catastrophe, we should be diversifying our investments. We should be hedging our bets, not doubling down on the most risky bet.

Matt Galloway has put together a dramatic graphic showing how the revenues from Vision2 Proposition 1 would be spent for "economic development." (Click the thumbnail to view full size.)

It reminds me, of course, of a Texas Playboys song. The 1946-1947 Tiffany Transcriptions featured Bob Wills and his band performing popular tunes from a wide variety of genres, including this Irving Berlin number, sung by vocalist Tommy Duncan:

I'm putting all my eggs in one basket.
I'm betting everything I've got on you.
I'm giving all my love to one baby.
Lord help me if my baby don't come through.

Love, marriage, and faith may be the only realms in which all your eggs in one basket is a wise strategy. As GoEnglish.com explains for the benefit of non-native English speakers: "To 'put all your eggs in one basket' is to risk losing everything all at one time."

We're being asked to borrow $214 million now in hopes of keeping a company that is bankrupt, that may not emerge from bankruptcy, that has already cut over 1,000 positions in Tulsa and is likely to cut more, that may go out out of business before we begin generating the tax revenue to pay back the loans.

Tulsa would be far better off with 100 businesses with 70 employees each, in a variety of industries, than one vulnerable business in a shaky industry with 7,000 employees. The money for Prop 1 would be better left in the free market. As a capitalist, I believe that the free market is the most efficient, sustainable, and fair way to allocate capital. If government wants to help, it should get rid of senseless regulations that add to the start-up cost burden of new businesses.

MORE: I couldn't find Tommy Duncan singing this song, but here's Fred Astaire and Ginger Rogers singing and dancing to "I'm Putting All My Eggs in One Basket" in the movie Follow the Fleet.

STILL MORE:

Remember that Vision 2025's massive Boeing incentives were a separate ballot item (Prop 1), and had the proviso that the 0.4 cent sales tax would never be collected if Boeing put their 787 plant somewhere else. They did and the tax wasn't collected. The $22.3 million for American Airlines was also a separate ballot item: Vision 2025 Prop 2.

Vision2 is different: All the economic development proposals are lumped into one ballot item. (If Commissioners Smaligo and Perry are all about giving the voters the chance to decide, why didn't they let us decide on whether to help AA separately from a decision on the deal closing fund?)

County officials have been saying that they would demand that American Airlines, Spirit Aerosystems, and IC Bus sign commitments to the county before the county trust would release funds to assist them. Of course, AA is in no position, in the midst of bankruptcy, to make any commitments. They must have flexibility to restructure in hopes of future profitability.

So what would happen if these three companies refuse to agree to the county trust's terms? Based on the ballot language, the tax would still be collected in full. The airport projects are capped at a maximum value, but there's no commitment to a minimum value. Any money not spent on airport projects or debt service would go into the "deal closing" fund. It may well be that all of Prop 1 winds up being a funding source for the "deal closing" fund.