Too Bitter a Pill To Swallow
Institute for Local Self-Reliance
November 13, 1997
Too many of our elected officials are old enough to have loved Mary Poppins as a child. The have apparently taken to heart her musical refrain, “just a spoonfull of sugar makes the medicine go down.”
Having determined that fan-ownership may be the only way to keep the Twins in Minnesota, the Governor and his core of legislative diehards are determined to tie this very intriguing community ownership proposal to the widely unpopular tax-subsidized new stadium. It’s awfully bitter medicine that may require more sugar than we have in our pantry.
This insistence on a new stadium was initially driven by the current owner’s need for more revenue. Without much attention as to why this need exists — poor management, irrational spending, lousy attendance, or circumstances beyond their control — the Governor eagerly jumped aboard the new-stadium-for-new-revenue bandwagon and insists on remaining in his seat even though the wagon seems headed for a very precarious cliff. Even after 62,000 other riders from Minneapolis jumped off this week by voting to restrict the ability of Minneapolis to subsidize sports teams, Governor Carlson is glued to his stadium bandwagon seat.
This stubbornness is wrong-headed for two important reasons: one, it complicates the economics of community ownership and two, it is lousy tax policy.
It’s clear that a new stadium provides new revenues for the Twins. It’s not clear that new revenues are necessary for new ownership. If a tax-financed stadium becomes a part of the new ownership deal, taxpayers will have aided in artificially inflating the sale price of the team — a good deal for the present owners, but a kick in the teeth to those members of the community who may be willing to invest in a fan-owned team.
If community ownership is a viable option (we’ll only know how viable if its tried), then shouldn’t the new owners help determine just how necessary a new stadium might be? Their input into a new stadium may drastically reduce its price or render a new stadium unnecessary. In this context, tying the new stadium to the community ownership experiment simply makes no sense.
Lastly, creating a new financing tool with which to subsidize business is a very poor policy decision for the state. The proposal from the Governor’s office dedicates the income tax revenue from players’ salaries to pay off the debt we incur on the new stadium. Problem is, those taxes are currently used for other general public purposes, like education, local government aid, and state parks. Even though the Governor argues that the dollars wouldn’t be here if they leave, that statement is true for anyone who chooses to leave Minnesota.
Taxes by definition are dollars collected from private sources for public goods. They were never intended to be dispersed according to who generated the revenue. Creating this new tax/subsidy policy – if you pay it, you have first claim to it – is a mighty slippery slope and a significant departure from the views of the former State Auditor, Arne Carlson.
In his 1984 report, “Public Subsidy of Real Estate Development: Questions about its Costs and Benefits, ” State Auditor Arne Carlson offers us very different advice than does Governor Carlson. Auditor Carlson advised: “Not only are expenditures for subsidies outside the normal scope of government auditing, the definition of ‘public purpose’ has become so broad that virtually any activity can be subsidized. …We advocate a more selective use of public subsidies and a clearer focus on the need for competitive market analysis in order to make certain that the taxpayer is getting his share of these programs’ benefits.”
What better market analysis than offering the fans an opportunity to buy the Twins unencumbered by the baggage of a subsidized stadium? Arne should stick to his own advice.