As Municipal Golf Courses Lose Money, Taxpayers Pick Up the Tab

In 2015, Lansing’s city government used $555,000 from its general fund to pay for its money-losing municipal golf course. That was not an unusual year; Groesbeck Golf Course has received money from the city’s general fund every year since at least 2005.

In those 11 years, Lansing’s general fund has transferred $5.9 million to the golf course. These transfers compensate for the municipal course’s losses, which annually total of at least $400,000.

Cities get into the golf business believing that they will make money. But a review of public courses in Michigan shows that, in practice, they are big losers for taxpayers. Municipal courses usually do not make profits, so local governments fund them through taxation.

In the meantime, the owners of private golf courses do not have the option to collect a tax if they can’t make the business work. They either improve their services to make profits or go out of business.

Golfers played 22,998 rounds on Groesbeck last year, which means Lansing taxpayers paid a $24 subsidy for each round. While the subsidy benefits the few golfers at the expense of the many taxpayers, including the private owners of golf courses.

Those business owners have to overcome two challenges from taxpayer-funded golf courses. First, they have to subsidize the municipal course through their taxes. Second, they have to compete against the artificially low prices municipal courses offer. Cities exempt municipal golf courses from property taxes and subsidize their losses, a combination which allows them to charge even lower prices than private courses.

Groesbeck is one of many municipal golf courses in Michigan. Auburn Hills’ Fieldstone Golf Club has received over $7.9 million in taxpayer funding since 2006. Midland’s Currie Municipal Golf Course has taken $1.9 million in the past 7 years. Canton’s Pheasant Run Golf Club cost taxpayers $2 million in 2007 and nearly $11.4 million over 12 years.

In these course’s combined 43 years of reporting, their city’s audits showed only two cases where revenue outpaced expenses. Pheasant Run made a profit in 2004 and Currie made money in 2011.

But even when municipal golf courses appear to be profitable, taxpayers are not necessarily off the hook. While a course may turn a profit when only day-to-day expenses are considered, the city may still give it give money for capital expenses. For example, Birmingham’s municipal golf courses, Lincoln Hills and Springdale, earned a meager $202,000 profit since 2005. Nonetheless, Birmingham still granted these courses $1.16 million for course and clubhouse improvements. Other cities also subsidize profitable municipal golf courses to improve the course, clubhouse and equipment conditions.

It’s hard to argue that golf is a core government function. In fact, it diverts money from important services, like public safety. Lansing estimates the value of its public course, Groesbeck, at $2.6 million. When the city has underfunded its pension system by nearly $250 million, it should not be losing money on leisure activities.

The story is the same around the state. Municipal golf courses are nearly always a money-loser and certainly unfair to taxpayers and competing businesses. Cities should sell their courses, and focus on the important services.

Correction: This story was edited after publication to correct the cost to taxpayers.