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0804, 28 Jul 15

Assembly takes up Bucks arena deal

My column for the West Bend Daily News is online. Here it is:

Almost two months ago it appeared that a bad deal for taxpayer support for an arena for the Milwaukee Bucks was going to be slammed into the budget with little input and less transparency. At the time, I wrote that it was a bad deal that needed to be taken out of the budget and reworked. Since then, exactly that has happened.

The budget passed without a deal for a Bucks arena. The Republican state leadership and the Democratic leaders of Milwaukee went back to the drawing board, included state Democratic leaders and the Senate passed a new version of a Bucks arena deal with a surprising bipartisan majority. Today the State Assembly is taking up for consideration the deal that the Senate passed.

Overall, the deal got better. The state Senate made three significant changes to the original deal being discussed in June. First, the deal imposes a taxpayer-funding cap. One of the problems with the earlier deals was that it left open the question of who would pay for the inevitable cost overruns for construction of a arena. The current deal caps taxpayer funding at what is stated and places the responsibility of an overrun into the hands of the Bucks’ owners.

The second major change was that the contribution from Milwaukee County was modified. In the previous version, the state would have paid $8 million per year for debt service with $4 million of that being offset by a convoluted plan whereby the state would collect debt owed to Milwaukee County. It was a dubious plan because it assumed that the debt could be collected (if it could be collected, why wasn’t the county already collecting it?) and left the state taxpayers on the hook if the debt could not be collected.

The new deal simplifies Milwaukee County’s contribution by fulfilling its $4 million obligation by reducing the county’s shared revenue funding by that amount. This means that Milwaukee County will have to find a way to either replace that $4 million in its budget or reduce spending by that amount, but it is a much more sensible and honest than the previous plan.

The third significant change in the deal imposes a perticket fee of $2 to help fund the arena. Of that $2, $1.50 of it will go to the arena’s governing district and 50 cents will go to the state. This fee is estimated to offset the state’s obligation by about $15 million. Financially, this provision helps reduce the taxpayers’ financial commitment to an arena, but politically, it is an essential concession that the people who will receive the benefits from a new arena will be contributing to its construction.

The deal got better, but is it good enough? Maybe, but the Assembly should insist on more information before supporting this deal. We learned a few weeks ago that the taxpayers’ obligation for the Bradley Center if a deal is not made is not necessarily $120 million as supporters previously asserted. Instead, the taxpayers’ obligation is likely somewhere between zero and $20 million. Assemblymen should know what the actual cost of saying “no” is.

Also, the economic impact for new sports arenas has varied wildly across the country. Any such projections offered by proponents of a deal should be evaluated with some skepticism. Instead, the lawmakers should focus on the more definitive economic projections related to the Bucks’ staff and players’ salaries and the Bucks’ direct financial impact. Any subsequent economic development from a new sports arena that might develop should be viewed as unpredictable, but welcome, gravy.

While the senate made the deal better for the taxpayers, there are still too many unanswered questions for the Assembly to pass it. While there is a deadline for a deal to be reached before the NBA pulls the team out of Milwaukee, the deadline is not so imminent that a deal must be passed by the Assembly today or even this week. There is time to get some more questions answered before casting a vote obligating the taxpayers of Wisconsin to an arena for the next 30 years.


0804, 28 July 2015


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