Congressional Republicans introduced a tax relief plan Thursday that could complicate plans for a Byzantine government-funded professional sports stadium in Boise. The GOP-authored tax package includes a provision that would end the use of tax-exempt municipal bonds for sports arenas, which has cost taxpayers billions of dollars since 2000.
The tax code, at present, allows millionaire and billionaire sports team owners to benefit from tax-free bonds, which are normally used to fund schools and other public infrastructure projects. The new plan would end the use of tax-exempt bonds to finance any stadium that houses professional sports teams or training events five or more days per year.
This is hardly a new issue. In 1986, the last time Congress reformed the tax code, lawmakers tried to end sports team welfare. They wrote the tax code to say that bonds would need to pay for 90 percent of a project to qualify for their use. But the result, in hindsight, was kind of predictable; local and state governments simply picked up more of the expense associated with stadium construction. Arguably, this trend has only accelerated the demand for new stadiums, say researchers. The center-left Brookings Institution estimated last year that tax-exempt bonds have come at a cost of $3.7 billion to taxpayers since 2000, and that’s just counting major league teams.
The city of Boise proposes to fund a 5,000 seat stadium that would become the new home for the Boise Hawks, a minor league baseball team now housed at Garden City’s Memorial Stadium. The plan calls for Boise taxpayers, through a mixture of local government agencies, to pick up most of the cost associated with the $40 million project. A spokesman for the city of Boise did not respond to a request for comment on the GOP tax plan.
Government-subsidized sports stadiums are a nothing less than a nightmare for taxpayers. A dozen years ago, city officials in Stockton, Calif., hoped their 5,200-seat brand-new stadium would usher in a new era of economic prosperity for downtown. But the city went bankrupt and the fate of the stadium became a big, open festering sore for the town.
Last year, the Reason Foundation reported that Hartford, Connecticut’s 6,000-seat stadium was $10 million over budget and behind schedule, a headache that came as the city was struggling with spending problems and a hiring freeze.
In 2008, New Jersey’s Newark Bears minor league baseball team filed for bankruptcy, sticking the city with a seven-figure annual debt payment. The stadium may even be razed — in which case taxpayers will spend some of their money on an asset that no longer exists. The examples of government sports team welfare go on and on.
If Congress does manage to pass tax relief, and in doing so it does manage to close this costly tax loophole created more than 30 years ago, no doubt the city of Boise will still look for a way to make its government-subsidized professional sports stadium happen. But then again, if this is just another critical piece of an evaporating dream, Congress, of all the strange and impossible-to-imagine heroes in this story, just may well help save the city of Boise from making a colossal mistake.
Wayne Hoffman is president of the Idaho Freedom Foundation. Additional research from Phil Haunschild.
Note: Photo from Paul Ryan's Facebook page.