The Sphere Would be a Boondoggle for Maryland Taxpayers

This op-ed was originally published in the Baltimore Sun.

Prince George’s County is in dire fiscal straits. In March, county officials claimed they had addressed a structural deficit of roughly $170 million, but now, the County faces a projected $151 million deficit. Maryland has faced its own budget problems, with state analysts projecting another multibillion-dollar structural gap in fiscal 2028. With these significant fiscal issues, local leaders ought to be especially careful about promising public revenue to dubious new developments. Instead, on October 27, the Prince George’s County Council voted 8-0 to authorize up to $215 million in special obligation bonds for a proposed 6,000-seat Sphere entertainment venue at National Harbor. The project is expected to cost about $1.4 billion. It may become a popular attraction—which is exactly why taxpayers shouldn’t be “asked” to fund it.

The financial details are key to understanding this boondoggle in the making. The bond legislation does not devote the entire $215 million to new Sphere construction. It also provides for refinancing existing National Harbor bonds, reserves, interest and issuance costs. Reporting on the proposal identified roughly $130 million in county tax-increment financing for the project. But the core aim of using scarce taxpayer dollars to fund private development is entirely misguided.

County officials point to an economic-impact analysis estimating more than $1.3 billion in annual economic activity and $63 million in annual county taxes once the venue opens. Those are flimsy projections that depend on rosy assumptions about visitor spending and the project’s performance. Before treating them as a justification for public financing, county leaders should explain how much of that spending would truly be new to Prince George’s County rather than diverted from other restaurants, hotels, and entertainment businesses.

Supporters fall back on a familiar point used in other state and local battles about subsidizing development: these are special obligation bonds, not general obligation bonds backed by the county’s full faith and credit. The repayment sources include designated tax revenues at National Harbor. That means a shortfall would not automatically leave the county’s general fund responsible for the debt. Still, earmarking future taxes comes at a significant opportunity cost. Debt and principal payments will extend through 2056, effectively tying the government’s hands for decades to come. Revenue devoted to paying bondholders is revenue that cannot be freely used for other county priorities—including giving taxpayers a much-needed break. The question is not simply whether the bonds are legally insulated from the general fund, but whether this is the best use of the tax base and worth keeping tax rates sky high.

There is a private-sector case for the Sphere. National Harbor is an established destination, and developers evidently see enough commercial promise to put substantial private money into the project. Indeed, roughly $1.2 billion of the estimated $1.4 billion cost is expected to come from private investment. That makes the public contribution worth scrutinizing all the more closely. If the venue is a sound investment that will supposedly pay off, private investors ought to be lining up and needn’t rely on taxpayer dollars.

None of this means Prince George’s County should oppose development at National Harbor. New businesses, visitors and jobs should be welcome if they can be sustained with private dollars. A county that recently struggled with a large structural deficit should be especially reluctant to fund a high-profile attraction. One manufactured and massaged economic-impact study is simply not enough.

The Council has approved the financing framework. It should now insist on clear public accounting of county taxpayers’ exposure, the revenues pledged to bond repayment and what happens if the forecasts prove too optimistic. More fundamentally, county leaders should reconsider whether an entertainment company with substantial private backing needs any level of taxpayer support. Prince George’s County surely has more pressing responsibilities than helping underwrite a giant illuminated dome.