Tuesday, March 18, 2014

Time for March Madness in Milwaukee- and for the city to get screwed again!

I, along with tens of thousands of others, will be descending upon downtown Milwaukee this weekend to watch games in the NCAA basketball tournament this weekend (and yes, got tickets to both sessions on Thursday, including good tix to see the Badgers). And I, like many others, will be spending cash at downtown establishments and staying at a nearby hotel. So with all of these tourists coming into town, you know how much tax revenue the City of Milwaukee will get off of all of us attending the Madness at the Bradley Center? A big fat ZERO.

How's this possible? Well, I'll explain it.

First of all, there is no question that March Madness will give the Milwaukee area an economic boost for the weekend. The Milwaukee Business Journal had an article yesterday detailing the impact the Tournament will have on the area's tourist-related industries.
The NCAA toured hotels last year in anticipation of the event, said Tim Smith, general manager of the InterContinental Milwaukee. It tries to put higher seeded teams closer to the event venue, in this case the BMO Harris Bradley Center.

The InterContinental, located a few blocks from the Bradley Center, will host a couple of big-name teams: Wisconsin and Michigan, Smith said. Each team will take up about 40 rooms for players, coaches and other people traveling with the team....

Visit Milwaukee predicts March Madness visitors will occupy nearly 6,000 hotel rooms and spend $2.5 million. Indirect economic impact, including supplies sold to vendors, will total about $4.7 million.

Obviously not a pic from this Bucks season

So where does all the tax revenue related to the Madness's visitors go? Well, there's the 0.5% Milwaukee County sales tax, so they should get a nice bump from all of the visitors' spending. But none of that money has to be shared with the City, and in fact, many County services are intentionally separated from the City's purview, even with the City being the majority of the County's population.

Much of the rest of the tax money generated from this week's Madness goes to a separate level of government known as the Wisconsin Center District. This district has been in place for nearly 20 years now, and is related to the Milwaukee tourism and convention industry.
The mission of the Wisconsin Center District: to maintain, and continuously build, our professional reputation in the convention, entertainment and sporting events industry on all levels, both locally and nationally; to present first class facilities in the twenty-first century; to provide the most effective use of space for our clients by utilizing the collective talents of all Wisconsin Center District employees; and to create and sustain jobs, income, and prosperity in the Greater Milwaukee community.....

WCD is governed by an unpaid, fifteen-member Board of Directors statutorially appointed by the Governor, the Milwaukee County Executive, the Mayor of Milwaukee and the Milwaukee Common Council President. The co-chairs of the State Legislature's Joint Finance Committee and the City of Milwaukee Comptroller serve on the board automatically, and two appointed members represent the hotel and restaurant industries, which derive the most benefit from a convention center.
So what does this unelected board get to administer? We'll let the Wisconsin Department of Revenue explain.
- 2.5% basic room tax (2% prior to on January 1, 2011)
- 7% additional room tax (City of Milwaukee only)
- 0.5% food and beverage tax (.025% prior to July 1, 2010)
- 3% rental car tax
These taxes generated $27.6 million for the Wisconsin Center District last year, and the idea behind is that it'll go into District facilities like the convention center, Milwaukee Arena and the Milwaukee Theatre. Yes, these are investments into downtown Milwaukee buildings and leads to several downtown-area events, but other than (hopefully) a benefit from improved property values near the district, the City of Milwaukee doesn't get a cent back in revenue from it - the funds go to the District and Visit Milwaukee (the area's tourism agency). This is in contrast to what several other Milwaukee suburbs are able to do with their room taxes, which is to use the money to pay for services in lieu of property taxes.
In Milwaukee and Waukesha counties, many cities use the grandfather clause to keep additional revenue in their general budgets. For example, in 2011 Wauwatosa kept 68 percent, or $620,000, of room tax revenue for its general budget and gave 32 percent, $288,000, to Visit Milwaukee, according to a 2012 report from the Wisconsin Taxpayers Alliance.

Franklin keeps 95 percent of room tax revenue, which was $176,000 in 2011, for its budget and allows hotel operators to keep 5 percent for administrative expenses. Oak Creek keeps all of its room tax revenue....

The city of Brookfield uses 75 percent of room tax revenue for its operating budget and 8 percent for economic development, said Robert Scott, finance director. The other 17 percent goes to the Brookfield Convention & Visitors Bureau.
Of course, the Bradley Center has been in the news for other reasons recently, as the Bucks' lease ends there in 3 years, and the Milwaukee oligarch community has been trying to drum up support to get funding for a new arena. Let's leave aside the obvious question ("Why would you build a new arena after the old one's barely been open for 25 years and hosts the team with the worst record and attendance in the NBA?") and look into which public entities might fund such an arena. It seems the Wisconsin Center District is a logical partner, given that the Bradley Center is right next to its facilities and the District would financially benefit from the bigger events that an updated arena might offer.

You would be wrong my friend! The District said last year that it wouldn't ante up for a new Bucks arena, and claimed that it was barely making ends meet as it was.
[In 2013], the district expects to pay $18 million in debt service, and that will increase 4.5% next year and 4% each year after that.

"We have a finite number of dollars that we collect for taxes," [District Chairman Franklyn] Gimbel said. "We don't use one single dollar to operate these three buildings. We do, however, use those revenues to pay our bondholders, which is a fixed amount."

But the district also allocated an estimated $6.2 million for Visit Milwaukee, which acts as the sales agent for recruiting conventions and other business to Milwaukee. Add in a capital maintenance reserve fund each year and there is little left over, Gimbel said, which is why some capital improvements projects have been postponed.
You can bet the future of the Wisconsin Center District's funding will be included as part of the big-picture conversation that'll come up with the downtown arena issue coming to a boil (especially once the "Bucks to Seattle" rumors get hotter), and this will probably also include the question on what to do with the 0.1% Miller Park tax after it can't pay for the Brewers' stadium in a few years.

But no matter the result of the Wisconsin Center District's finances and a new downtown arena for the future, it doesn't change this central fact. The City of Milwaukee will be providing law enforcement, streets, parking, and many other services to help the NCAA put on the Big Dance this weekend, and won't get a dime back in tax revenue to do it. And given that there's no market for a facility like the Bradley Center without the population center and jobs associated with the City of Milwaukee, that seems to be more than a bit unfair to me.

No comments:

Post a Comment