Tuesday, July 14, 2015

Use sales tax to pay for Bucks arena

Looks like things might be moving pretty fast on the Bucks arena front. Members of the State Senate are meeting today and tomorrow (at least) to try to make enough modifications to the current arena plan to allow the bill to get 17 votes to pass the Senate. Because it involves something they have a vested interest in, the Journal-Sentinel has a good bit of journalism on the situation.
In a sign of progress, Sen. Chris Larson (D-Milwaukee) said he believed Democrats had gotten a concession that would clear the way for him to vote for the package.

That change would drop a requirement that Milwaukee County turn over its debt collection program to the state, which has more power to recover unpaid property taxes and traffic fines. Myranda Tanck, a spokeswoman for Senate Majority Leader Scott Fitzgerald (R-Juneau), confirmed senators are discussing getting rid of that requirement, but said no final decisions had been made....

One aspect of the deal Democrats such as Larson have opposed is the provision that would put the state in charge of Milwaukee County's debt collection. Larson said it was "heartless" to have people who are having trouble paying their debts pitch in for the arena.

Larson said the change he was working on would end the requirement that the state take over debt collection, but would still require the county to put $4 million a year toward the arena.
Which makes you wonder what takes place of County Exec Chris Abele's debt recovery scheme to have the County come up with the $4 million a year. A quick look at Milwaukee County's sales tax collections show that it received $69.8 million last year, so some quick math indicates to me that a 0.1% sales tax would raise around $14 million (and I'm not assuming any growth in collections).

The non-state aspect of the Bucks arena deal says that $203 million is slated to come from the County, Wisconsin Center District, and the state of Wisconsin. With interest over 20 years, that amount is estimated to be somewhere around $377 million. If you start with $14 million from a 0.1% sales tax in 2016, and then given a very rough estimate of $500,000 in added sales taxes each year (around 3.5% at the start, less in later years), that should get you around $377 million over 20 years. You could even take out the state portion of Bucks funding, as was done in the cases of Miller Park or the Lambeau Field projects over the last 20 years, and things are all good. You don't even have to raise the Wisconsin Center's tax and debt to do so (which was a huge concern of State Sen. Lena Taylor, and why she got very upset that there were not any WCD officials invited to the Joint Finance Committee's hearing on the Bucks arena). Lastly, the 0.1% tax could pay for the $10 million in state funding that is slated to be used to maintenance the Bradley Center next year.

If you really wanted to be cool, you could have that sales tax become 0.25% in Milwaukee County, and then get rid of the 0.1% tax for the surrounding counties for Miller Park (which the 262 types still complain about), and speed up the payoff for the Miller Park debt. Then, once the Miller Park tax ends, you shift the 0.25% tax to the Bucks arena, which has money coming in at a pace of $35 million a year, which means the debt would still likely be paid off by 2036, if not sooner. Seems like a nice compromise to do it, and it keeps the sales taxes in Milwaukee County, where the facilities are located.

Don't take that analysis to mean I'm in favor of public funding fpr a Bucks arena as it stands today. I still am fuzzy on how many property tax exemptions there are, I don't buy that the arena district will boom with development, and we should be investing in MPS and UW-Milwaukee over an arena in a league that stands to make big money in the next 2 years even without a new palace to play in. But I am saying that it seems a lot easier to fund it with a local sales tax in Milwaukee County than these convoluted schemes across multiple jurisdictions.

Guess we'll wait and see what the final product of a bill is. I just hope we get a chance to see what it is before they vote on it.

1 comment:

  1. I'm not a student of law, but I wonder why the county/state can't cut a deal that requires any money they provide to be part of a partner/investment package. If taxpayers provide investment funds, shouldn't they see some kind of revenue/return from profits, tax revenues aside?