August 25, 2004

Counting costs in Arlington

Last night, the Arlington city council unanimously approved a plan to spend $325 million in public money on a Dallas Cowboys football stadium. Arlington voters will now have the final say, in a November referendum.

The Fort Worth Star-Telegram points out one previously unnoted opportunity cost of the proposed Cowboys stadium: By raising the Arlington sales tax to 8%, it would leave the city just one-quarter of a percent shy of a state-mandated sales tax cap. As a result, the city would be unable to raise taxes for other needs, which, writes the paper, "would limit Arlington's financial ability to repair roads, build parks and undertake public works projects for years to come."

(A similar scenario took place in Maryland in the 1990s, where the four sports lotteries used to fund stadiums for the Orioles and Ravens so tapped out the lottery market that when a lottery to fund schools was later proposed, state officials were told that it simply wasn't feasible to raise any more money this way.)

Arlington Mayor Robert Cluck, who's spearheading the stadium drive, insisted that the benefits of a stadium would outweigh the costs, saying, "You have to spend money in order to make money." The economic impact study that Cluck commissioned (PDF file here), however, says differently, projecting about $2.9 million a year in new local tax revenues from the stadium, as against more than $20 million a year in construction debt payments. That does sound like a certain kind of Texas investment strategy, but probably not the one Cluck had in mind.