December 11, 2007

"No new taxes"

There have been a spate of stadium and arena stories in the news in recent days, all with a similar theme: how to get the public to pay for them without making it look like, you know, the public is paying for them.

• Manitoba Premier Gary Doer said he'd be willing to redirect property tax revenues from a new Winnipeg Blue Bombers stadium to help the team's private owners pay off construction costs. (The Bombers are currently community-owned, but Canadian media baron David Asper is negotiating to buy them.) This is what's known in the U.S. as "tax increment financing," or a TIF; lord knows what they call it there.
• Lexington, Kentucky is considering plans to replace Rupp Arena with a "state-of-the-art" building (presumably meaning including luxury suites, which the 31-year-old Rupp lacks) to host University of Kentucky basketball games. The cost hasn't been revealed, but the city would pay for it by designating a new downtown TIF district.
• The Kansas City Wizards soccer team are looking to get a new stadium as part of a downtown development project on the Bannister Mall site, but K.C. Mayor Mark Funkhouser says he opposes the funding plan, which would use a so-called "Super TIF" that would redirect all tax revenue from the district to the project, not just the increased increment. (Shouldn't that really be a TF?) "I want to see the Three Trails redevelopment happen," said Funkhouser. "But I don't intend to support the current plan without more thorough discussion and, at least, the removal of the Super TIF requirement, which redirects 100 percent of any new property, sales and earnings taxes back to the project."

As I've written before, the problem with TIF is that while it's sold as a free lunch - "without this project, the city wouldn't be getting these tax revenues, so there's no real cost to the public" - it can end up costing taxpayers in many ways: when increased consumer spending in a TIF district siphons off spending in an area where tax revenue actually goes to the municipality, for example, or when developers demand TIF subsidies for projects they would have initiated anyway. In the end, TIFs make about as much sense as me going to the store and demanding that I get my sales tax rebated, on the grounds that if I didn't make the purchase, the government wouldn't collect any sales tax - the main difference being that I seldom have a team of lobbyists and p.r. flunkies with me when I go to Rite-Aid.

And speaking of p.r., let's close with Nashville finance director Richard Riebeling, explaining during a discussion of proposed lease givebacks for the Predators how people who pay taxes aren't necessarily taxpayers:

"I think the important thing is that taxpayers can be assured that no taxpayer dollars - no property tax dollars - are being used to cover the additional cost of this transaction. It's coming from hotel, motel tax."

Unless, of course, the hotelgoers refuse to pay it, arguing that if they'd stayed home, the city wouldn't be collecting it. This could go on forever!