Twins ballpark tax a picture of financial health, weakness

MinnPost.com

Last year at this time, I ran an item about the onrushing recession and its effect on the 0.15 percent Hennepin County sales tax financing Target Field.

The conclusion then: Revenues in 2008 were more than enough to pay the ballpark’s $20 million-per-year obligation to bondholders. Looking ahead to 2009, I wrote that proceeds would have to fall by around 30 percent — a Depression-type decline — to imperil ballpark payback.

So how did 2009 turn out? The data gives us an fascinating look at Hennepin’s economic health — the sales taxable kind, anyway.

All told, tax revenues slumped 6.3 percent. That’s quite a bit; while not apples-to-apples, the nation’s Gross Domestic Product didn’t fall more than 4.6 percent in the first three 2009 quarters.

Still, the county reaped more than enough revenue to pay its ballpark tab: $27.3 million in ’09 compared to $29.1 million in ’08.

That’s why Hennepin officials could send $2 million to non-Twins athletic fields and libraries, allowed under the ballpark’s enabling legislation. And it means reserves, which stood at $8 million last January, were boosted, though I don’t have the exact amount. [Update: reserves stand $6.9 million, but another $3.7 million went to pre-paying prinicipal, which is good.]

The month-to-month yearly comparisons (top) are also revealing.

As you can see, 2009 topped 2008 briefly in March and April (up 4.6 percent and 9.2 percent respectively), fell off during summer and fall (in the 6 to 11 percent range), and plunged (17 percent) in November. December closed out the year off 7.6 percent. 

If similar declines continue in 2010, trouble is that much closer. However, my back-of-the-envelope says proceeds would have to fall another 27 percent to hit $20 million — and even then, those reserves are there for just such a circumstance.

Whatever you think of the wisdom of the ballpark tax, county planners budgeted conservatively, especially compared to morons in Cincinnati and elsewhere.

Comments (10)

  1. Submitted by dan buechler on 01/22/2010 - 12:02 pm.

    Minnpost business agenda had an article last week about the steep drop in Hennepin’s managerial jobs and wages. I sure this is havinf an effect. Read the strib article on the libraries could somone (a commentator?) tease this out for me.

  2. Submitted by Charley Underwood on 01/22/2010 - 12:13 pm.

    Interesting clause: “Whatever you think of the wisdom of the ballpark tax….” Sorry, but that is entirely too quick for me on several levels. First, there are really major questions about whether the tax-payers in Hennepin County can actually afford this tax in today’s economic circumstances. People are already losing their homes, skipping purchase of prescription drugs for life-threatening conditions, flooding the food shelves in record numbers. So we really have to hesitate a bit before glossing over a $30 million yearly tax so quickly. We may not see them, but this tax will indirectly cause deaths among those most vulnerable. Is it really wise to do this?

    But even if we had the money with no hesitation, the question has apparently never been asked if this is the BEST use of $30 million a year. Is it better than helping schools? Is the few pennies on the dollar really better than the whole amount for our libraries? Couldn’t we pry loose a bit of that money to put photo-voltaic panels along the Greenway, instead of the high-tension wires which will destroy the (also) $30 million on eco-development there? Couldn’t we rehab a few houses instead of sending in the bull-dozers? You get the idea: spending such a huge sum on a sports arena is just about the WORST way the county could spend it’s money in these hard times.

    And don’t give me any static about this all being water under the bridge! We are considering exactly the same sort of subsidy to Zigi for a new public-financed football stadium. This spending is beyond any rational justification. It is greed and it is evil.

  3. Submitted by TJ Jones on 01/22/2010 - 12:37 pm.

    Charley: While I appreciate your passion on this topic, several of your comments made me roll my eyes. First of all, when you say,…”this tax will indirectly cause deaths among those most vulnerable…”. Please…show me some proof. Did people die when we moved the Shubert theatre, or built the new Guthrie, or built light rail, or any number of other public expenditures? If we strictly follow your rational, then there should be no money provided to anything deemed to not essential to simple existence. Do you also believe the recent tax approved to subsidize the arts and natural resources wasteful? Why was that tax not assigned to feeding the homeless? Do we assign a deaths to every financial expenditure or simply the ones you disagree with?

  4. Submitted by Paul Udstrand on 01/22/2010 - 12:42 pm.

    I’m soooooo glad that Henn Co. is collecting enough to pay for the stadium, I mean that’s all that really matters right? It’s interesting though, this notion that you can collect money with taxes and actually pay for stuff? What genius came up with that? They should try that maybe to pay for other stuff, like the deficit or something.

  5. Submitted by Charley Underwood on 01/22/2010 - 04:34 pm.

    TJ Jones: I am not sure what sort of proof you are looking for. Would you accept that some people die when they don’t receive medical care and you would agree that our current financial situation is causing cutbacks on medical services? If those 2 things are true, then spending money on a stadium instead of medical care indirectly causes deaths.

    Would you agree that some additional number of people will die if we increase emergency responders from 3 minutes to 6 minutes? If so, then spending money on a stadium while you close fire stations would indirectly cause some deaths.

    Would you agree that sleeping outside in Minnesota in January might cause some additional deaths? Then spending money on a stadium instead of helping people save their homes will be partly responsible for at least some of the 140+ deaths last year to Minneapolis citizens who died outside and homeless.

    Not all expenditures must go to our physical needs, of course. “One may not live by bread alone,” as one of my biggest heros once said. And some government expenditures are going to end up saving lives, of course, like maintaining bridges or building energy sources that don’t pollute our air with mercury.

    But what sort of priorities do we have in these hard economic times to pay the Pohlads (or the Wilfs) nearly a billion dollars while people die on the streets? Roll your eyes all you want, but it seems completely upside-down to me. Can you really justify this expense in these times? Do you really feel that public funding for a sports stadium provides the greatest public benefit we could possible get for the money?

  6. Submitted by Bradley Bolin on 01/22/2010 - 04:49 pm.

    Yes, the “babies are dying because we built a ballpark” logic is tiresome and lame. The fund should get a nice boost this summer as an extra million people come downtown for outdoor baseball and pay sales tax on their tickets, hot dog, beer, parking, etc. This is an eminently livable tax increase ($10-$15 a year for most people) that has done wonders in the North Loop neighborhood I work in already. It will be fun to see what other redevelopment is spurred here as the economy picks up. We already have a new Holiday gas station as well as the transit hub, so I cannot wait until it warms up and really comes alive in April.

  7. Submitted by Hiram Foster on 01/22/2010 - 05:01 pm.

    “The question has apparently never been asked if this is the BEST use of $30 million a year. Is it better than helping schools?”

    It isn’t but the fact that I don’t think anyone would say that it is, is evidence of the fact that the question is irrelevant. In any event, the decision was made and it’s too late to unmake it. And the brutal political reality is that the otherwise faceless politicians who made it have all been re-elected since it was made.

    One lesson learned here is that we have to pay attention to all levels of government. Year after year, decade after decade, the Twins ballpark lost every political test. But the battle was lost when supporters were at long last able to find a layer of government willing to cave in to their demands, and also willing to sell out their voters. The only consolation I have ever taken from that is that at least it took ballpark supporters a very long time to find such people.

  8. Submitted by Dick Novack on 01/23/2010 - 08:52 am.

    I’m just guessing, but commentors seem to think Hennepin and Minneapolis were always as today. Perhaps they are too young. I was around when “downtown” seemed to be dying, when leaders were castigated for building the Henn cty govt center, redeveloping “skidrow”, making old Henn Cty General Hospital and neighboring private institutions into a major medical center, the dome, Target Ctr, risky building at county expense of the freeways now known as 169 & 62 that the state would not build (but later bought), and to top it off no one actually lived downtown unless they slept on the street.

    I sat in both downtown business meetings and suburban political meetings discussing the old fashioned economic theories of spending institutional money to create an environment that draws people and more businesses. “Seed money.”

    It worked. What Hennepin county is today (and Ramsey is not), what Minneapolis is today (and St. Paul is not), grew from what then was considered inadvisable. In fact the vibrant city and county and (comparatively) strong economic health you see would not have happened. Billions, perhaps trillions over time, in jobs, businesses, and “quality of life” you have now came from leaders looking to the future wisely. Building the better mousetrap to draw more mice. No one hunkered-down as did many other areas in this country. No one took limited risks or did anything half-way. Check out comparable cities for perhaps years 1955 to 1975 when this growth boost started. No other area bloomed as well as we did. It did not just happen. It was inspired.

    What is lacking today is enough people to support the same visions of the future others had in the past. Personal greed and “me” have become much more important than “us” and is the reason so much grief has happened.

    As long as we don’t elect commissioners who screw it all up, Hennepin will continue to lead.

  9. Submitted by dan buechler on 01/23/2010 - 12:07 pm.

    Mr. Novak good to read you. I think you have a voice we don’t hear too often and would like to hear your perspective more often.

  10. Submitted by Paul Udstrand on 01/24/2010 - 09:53 pm.

    Mr. Novak,

    MPLS didn’t attain the success you describe by spending more on stadiums than legitimate public infrastructure. It is now a matter of history that the big development was supposed to envelop the metrodome never materialized.

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