Scott Walker about to raise taxes for a new sports arena?

Depending on how this plays out, political advisers may wind up looking at this one as one of the more curious choices in the history of presidential politics. Out in Milwaukee, the Bucks are allegedly in need of a new sports arena. But as with all such massive proposals, the cost of the project is going to be astronomical. As has happened in so many other cities – frequently with financially disastrous results – the owners of the team are looking to the government and the taxpayers to help foot the bill. It’s a plan which apparently has the support of Governor Scott Walker, but this one is gong to be tricky.

Taxpayers would pick up half the cost of a new $500 million arena for the Milwaukee Bucks under a financial deal that would rely on current and former team owners for the rest, Gov. Scott Walker said Thursday.

Walker, a likely presidential candidate, has argued for months that it will cost the state more in lost income-tax revenue if the NBA moves the team from Milwaukee than it will to pay for a new downtown arena.

Standing behind a podium with a sign that read, “Cheaper to Keep Them,” he announced the long-awaited deal surrounded by Republican legislative leaders, along with the Democratic leaders of the city and Milwaukee County.

“The price of doing nothing is not zero. It’s $419 million,” Walker said, one of repeated references to the estimated lost revenue and growth over 20 years if the team moves. “It’s not just a good deal. It’s a really bad deal if we don’t do anything.”

The numbers here are staggering. Owners and former owners of the Bucks are pledging to kick in roughly a quarter billion dollars to help the deal go through, but the taxpayers would have to pony up an equal amount if it’s going to get done. In order to pay for this there’s a whole lot of borrowing to be done. Wisconsin would issue $55 million in bonds (which, with interest,would cost $80 million to pay back.) Milwaukee would have to kick in $47 million and the county would need to issue $55 million in bonds. The Wisconsin Center District would issue an additional $93 million in bonds as well.

And how would the state cover these costs with an already strained budget? I’ll give you three guesses.

Allowing the center to issue those bonds would require the Legislature and Walker to change state law to extend the district’s repayment period.

The district levies three taxes in Milwaukee County: 3 percent on car rentals, 2.5 percent on hotel rooms and a half-percent on restaurant food and beverage sales. Current law allows the district to increase the rental car tax to 4 percent and the hotel tax to 3 percent. If that is done, Walker has argued, it wouldn’t be a new tax.

It’s not a terribly clever bit of semantic juggling to say that if you increase the taxes on car rentals and hotel rooms, it’s not a new tax. That’s technically true since those taxes already existed, but it’s still a tax increase. Americans for Prosperity has already come out against the plan and Wisconsin Republicans are grousing to the press about it.

Walker is getting ready to officially announce a presidential bid which has been ongoing in all but name for quite a while now. It would be a curious choice indeed if a Republican candidate made a tax hike one of his most recent actions on record just before the big reveal. And none of these arguments really deal with the fundamental question of sports arenas used by millionaire athletes and billionaire owners being funded by the taxpayer. A few years ago The Atlantic released a lengthy study of the history of public funding for sports arenas and the news was great for the teams, but terrible for taxpayers. In almost all instances, the hyped promises of local revenue never matched reality and the taxpayers wound up having to swallow the losses. And it apparently doesn’t have to be that way. Nearly all of the NFL stadiums have sucked up public funding, but the New York Jets / Giants stadium in New Jersey somehow managed to make a go of it without a single penny of tax money.

Scott Walker is selling this as a way to forestall losing tax revenue from the arena and the teams rather than promising a rich bounty through attracting a new franchise, but the song sounds the same. The sports arena trap has sucked in many, many cities in the past so it’s a hard sell to begin with. And right before launching a national campaign as a Republican it’s probably worth remembering… a tax increase is still a tax increase.