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Obama’s proposed end to stadium tax breaks goes wide right

WASHINGTON – If you don’t want taxpayers nationwide to help pay for a new stadium for the Buffalo Bills, you have a friend in the highest of places: the White House.

But you don’t have many other friends in Washington.

President Obama’s fiscal 2016 budget proposal includes a little-noticed provision that would bar the use of tax-exempt bond financing for new stadium projects.

But the Republicans who control Congress have not included that provision in their budget plans, and Republicans said that repealing the stadium tax break would be, in effect, a tax increase – something that virtually all GOP lawmakers have vowed not to support.

And New York Democrats, such as Sen. Charles E. Schumer, are just as opposed to repealing the federal tax break for stadium construction as Republicans are.

“This provision would limit the City of Buffalo and Erie County’s options for building a new stadium for the Bills and possibly harm efforts to keep the Bills in Western New York, and I will oppose it,” Schumer said. “I do not think it has much chance of passing.”

In other words, Obama’s proposal is likely to go nowhere – even if economists praise the president for having the courage to try to end a taxpayer handout to billionaire sports team owners.

“On this important and revealing issue, Obama ends up being the fiscally conservative responsible adult,” said John Vrooman, a sports economist at Vanderbilt University.

In the grand scheme of a $4 trillion budget plan, Obama’s stadium financing proposal – which was first reported by stateline.org – is decidedly minor. A 2012 Bloomberg analysis found that the tax exemption had cost the federal government only $146 million.

But the Obama administration argues that tax-exempt bond financing was designed to benefit the public good, not the private-sector owners of professional sports teams.

“Allowing tax-exempt governmental bond financing of stadiums transfers the benefits of tax-exempt financing to private professional sports teams because these private parties benefit from significant use of the facilities,” the U.S. Treasury Department said in its “Green Book,” which explains the budget proposal in detail.

That’s just what economists say. They note that study after study has shown that new-stadium construction does not produce widespread economic benefits – and that it instead mostly benefits team owners.

That being the case, they wonder why taxpayers nationwide might end up having to subsidize stadiums in Buffalo or Milwaukee or wherever.

“A new stadium in Buffalo isn’t going to help Dennis Zimmerman, who lives in Northern Virginia,” said Dennis Zimmerman, a longtime critic of public funding for stadiums who serves as director of projects for the American Tax Policy Institute. “It’s not going to help Joe Schmo who lives in California, so why should he have to pay for it? You ought to pay for it yourselves.”

If Obama’s proposal were to become law, that’s exactly what would happen. States and localities still could issue bonds to cover stadium costs, but borrowing costs would be higher because those bonds would not be exempt from federal taxes.

Presuming that some public money will be part of the package that will pay for a new Bills stadium, that means the local taxpayers’ costs would be higher under the Obama proposal, while taxpayers nationwide would be off the hook.

That increase in costs borne locally is one reason that both Rep. Chris Collins, R-Clarence, and Rep. Brian Higgins, D-Buffalo, oppose the Obama stadium financing proposal.

“If the president’s proposal goes through, the cost of any stadium or renovation will go up,” Collins said. “That puts an additional burden on the residents of Erie County. These tax-exempt bonds are a way of reducing costs.”

Higgins agreed, saying he feared the proposal could even boost the cost of financing the $130 million in improvements completed at Ralph Wilson Stadium last year.

“This could increase costs for current taxpayers,” Higgins said.

Rep. Tom Reed – a Corning Republican and avid Bills fan – said he opposed Obama’s proposal as well.

“The economic activity generated by attractions such as the Buffalo Bills stadium or the Watkins Glen International racetrack provide revenue for local governments which otherwise would have to come out of the pockets of property taxpayers,” said Reed, a member of the tax-writing Ways and Means Committee.

The dim prospects facing Obama’s stadium financing proposal come as no surprise to Zimmerman.

Calling the stadium tax break “exactly the kind of government overreach Republicans complain about unless it means money in the pocket of their contributors,” Zimmerman added: “I’ve been at this stadium stuff for 20 years. It’s just a losing battle.”

email: jzremski@buffnews.com

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