Wednesday, July 15, 2015

Bucks arena bill goes through, but looks very different

Well that was fast (and not the least bit sketchy). 21-10 vote in the Senate, no less. Here's the list of votes for you to file away, courtesy of Wisconsin Public Radio's Shawn Johnson, and you can reward/ punish as appropriate.

So now the Bucks bill bounces over into the Assembly. You'd figure it passes, given the amount of suburban GOPs that dominate that chamber, but we'll see for sure (and I'm not sure when they plan to take it up). But what was passed is a whole lot different than what we saw before. Let me direct you to the Legislative Fiscal Bureau's explanation of the changes in the Bucks arena, and how this thing shakes out. One of the biggest changes involves the addition of a $2 ticket tax.
Specify that the Wisconsin Center District (WCD) board require the sponsor of an event held at a sports and entertainment arena to impose a surcharge on each ticket that is sold to the event equal to $2 on each ticket sold. Specify that the event sponsor forward to the board of directors any surcharges collected under this section. Require the board to remit 25% of the surcharge revenues to the Department of Administration (DOA) for deposit of these funds to the general fund and the District would retain the remainder of the surcharge revenues. When the arena construction is complete and events begin to be held, it is estimated that GPR revenues would increase by approximately $500,000 annually to reflect deposit of these funds to the general fund and revenues to the District would increase by approximately $1,500,000 annually associated with the surcharge.....

Delete the provision requiring the Department of Revenue (DOR) to enter into an agreement with Milwaukee County for collection of County's debt, and the requirement that the County (or by written proclamation of the County Executive) enter into such an agreement with DOR.....

Specify that beginning with the distributions in 2016, and ending with distributions made in 2035, the annual county and municipal aid payment to a county in which a sports and entertainment arena is located would be the amount, as otherwise determined under current law for that county, minus $4,000,000. Reduce the sum sufficient county and municipal aid appropriation by $4,000,000 in 2016-17 to reflect this aid deduction.
So there's a ticket tax that in essence reduces the state's payments for the arena from $4 million to $3.5 million, and the state also saves by not having to take over Milwaukee County's debt collection, and they cut Milwaukee County's shared aids by $4 million! Sure, the County would receive a fiscal boost from added sales taxes if this arena really pays off (still an "if", by the way, given that other County businesses may see less spending at the same time), but losing $4 mil in state aid seems like quite the screw job, and on the surface, it looks like County Exec Chris Abele got taken to town by the hedge funders running the Bucks and arena backers in the Legislature.

The ticket tax also helps to pay for the $203 million in lifetime debt costs the Wisconsin Center District has to take on for the arena, but obviously not all of it. And there's an additional sweetener that was thrown in for suburban GOP Senators like Mary Lazich, Leah Vukmir and Alberta Darling (all of whom voted for this bill), because the current 0.5% food and beverage tax that the Wisconsin Center District levies would go away once their current (i.e. non-Bucks arena) debt is paid off. Yes, the Wisconsin Center District would have other sources to pay off their share of the Bucks arena costs, such as local taxes on rental cars and hotel rooms, and the theory is that the new arena and other development will encourage more of those items to be purchased, which would raise the revenue further. But it also puts the WCD at risk of struggling to come up with the funds if the economy turns sour (like what happened with Miller Park) and/or the arena doesn't spur much development.

There are a few other interesting items, such as defining (and narrowing, it seems) the amount of property that would be tax-exempt, and making the Bucks responsible for maintenance and repairs to the facility (unlike the Bradley Center, where the state is slated to shell out $10 million for maintenance, as part of another provision in this bill). And I certainly agree that the bill is a massive improvement from the pile of junk Gov Walker proposed 5 months ago, which had over $600 million in property tax breaks and $400 million+ of state spending thrown into this arena, compared to the $70 million total that it'll cost the state under this bill, and the smaller scope of property tax exemptions for the Bucks and the related development.

But I still wouldn't have voted for it myself. There are far too many other needs in Milwaukee that deserve investment over this project (especially involving K-12 and UW-Milwaukee) and with the NBA making money hand-over-fist in the coming years, the Bucks owners didn't need the help to build this, if they felt Milwaukee was a place worth keeping the team in. But as this arena debate has evolved, it's pretty obvious that the Bucks owners see it more as an opportunity to make big bucks through arena-related real estate, and they're probably right. But it sure got a lot easier with the state and local Milwaukee governments giving $250 million up front to the arena, and I just hope it doesn't result in an "Idiocracy"-style outcome where many parts of the City suffer and decline while building and maintaining a nice shiny sports palace downtown. It sounds a bit too much like Rahm Emanuel's Chicago to me, and that's not a good thing.


  1. Jake, Does the development surrounding the arena remain tax exempt in this deal?

  2. Some of it, but I think only the on-site stuff. Bars and restaurants and definitely NOT exempt, it explicitly says so in the bill. This is a definite improvement from Waker's original bill

  3. Thanks for the feedback Jake.