In his new budget proposal, President Barack Obama challenges "some of the most loathed people in sports" —
team owners who threaten to pull up stakes and leave town if taxpayers refuse to pay for a new stadium, Politico reported.
The move has the potential to put some Republicans, among them Wisconsin Gov. Scott Walker, in an uncomfortable position.
The White House budget plan released Monday, Politico noted, "would eliminate tax benefits that make it easier for cities to raise money for new, luxurious sports facilities."
The tax breaks have provided billions worth of financing for arenas and stadiums, including $325 million in tax-exempt debt for the Dallas Cowboys' $1.3 billion football stadium and almost $1 billion worth of tax-exempt debt for the new Yankee Stadium.
Although it appears unlikely to become law, the purpose behind the Obama proposal may be to push the Republicans into an embarrassing political position where they are forced to choose between supporting what many conservatives regard as "corporate welfare" or seeing sports teams pick up stakes and move.
Under current law, governments can use the proceeds from tax-exempt bonds for private activities like stadium projects unless more than 10 percent of the debt service comes from a private business and more than 10 percent of the use of the facility is attributed to a private interest.
The White House proposes to significantly narrow the exemption for bonds issued after Dec. 31, 2015, a move it says would raise $542 million in new revenue through 2025.
By doing this, the administration says, its proposal would effectively eliminate tax-exempt governmental bond financing for sports teams' facilities.
"The current structuring of the governmental bonds to finance sports facilities has shifted more of the costs and risks from the private owners to local residents and taxpayers in general," the Treasury Department said in explaining the proposal.
In Wisconsin, the issue is already causing headaches for Walker,
who has proposed issuing $220 million of state-issued bonds for a new arena for the Milwaukee Bucks.
If Wisconsin does not raise money to help the Bucks pay for a new arena by 2017, then the basketball team can consider moving elsewhere, the governor said.
But Walker’s proposal is already facing criticism from small-government advocates like Bob Dohnal of Milwaukee, publisher of the Wisconsin Conservative Digest.
"All these claims about development and improving the economy are all just baloney," Dohnal told Politico. "Scott Walker is really concerned that when you lose a franchise, you get a black eye."
The Koch brothers-backed Americans for Prosperity-Wisconsin has also questioned Walker’s arena plan.
"We are disappointed to hear that the state is embarking on yet another plan to finance a sports arena in Milwaukee," said David Fladeboe, the state group’s director.
"While it appears that some protections are being put into place, the Governor’s plan would put the state and taxpayers on the hook for future obligations," he added.
Across the country, "political resistance to stadium subsidies has definitely increased in the last 15 years," said Roger Noll, an economics professor at Stanford University who has written about tax breaks for sports facilities.
The public has "become better informed. It’s politically easier to withdraw the subsidy now than it would have been 15 to 20 years ago," Noll told Politico.
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