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Vikings stadium proposal is bad public policy and profoundly unfair

Paul OstrowPaul Ostrow

How does a progressive Democrat explain $728 million for the “luxury” of a new stadium when so many are in need? How does a Republican committed to ”no new taxes” and to “the free market,” explain $728 million in new government spending to subsidize a wealthy sports owner who claims the free market just won’t work in football?

The perfect political solution may be at hand. Remarkably, it is quite possible no one will have to take a tough vote. A tentative agreement to pay for a new Vikings stadium and future “operating costs” apparently relies on $398 million in new gambling revenues and $330 million from the dedication of city sales and entertainment taxes.

For the over 90 percent of Minnesotans who do not live in Minneapolis, this is a pretty sweet deal. You might be a bit uncomfortable with this use of public money, but at least it won’t be your money. If you are not a gambler and if you don’t live or work downtown, you get to enjoy the Vikings pretty much for free.

Much is made of how tough a vote this will be for legislators in an election year. Really? The Legislature got a free pass when Hennepin County decided to fund Target Field. It was an easy vote to let Hennepin County raise someone else’s taxes. This bill is another free pass. Once again the Legislature will not be raising anyone’s taxes – only allowing someone else – the City of Minneapolis – to use  taxes from its residents and business patrons for the next 30 years to pay for the stadium. 

This proposal is bad public policy and is profoundly unfair. The Minneapolis City Council should act now to push the reset button. The city should pledge to work with the state and the Vikings on a new stadium in Minneapolis and to commit up to $10 million to its construction. The City Council and Mayor R.T. Rybak were unanimous in their support for the City’s Charter during the Target Field discussions. The same message needs to be delivered now on the Vikings Stadium.

Paying an ever increasing premium

The greatest threat to the continued vitality of Minneapolis is the ability to fund basic city services at a competitive property tax rate. City property taxpayers have reason to fear a future of continuing erosion or elimination of local government aid, no access to sales taxes for critical services and an increasing burden to fund sports facilities and regional amenities. City businesses and residents are paying an ever increasing premium for the privilege of providing the region with beautiful parks, sports and cultural facilities and a world class convention center.

The response from many legislators is that Minneapolis benefits so Minneapolis should pay. The reality is that everyone benefits but Minneapolis pays. It is the state, not the city, that will lose $20 million a year in income and sales taxes if the team leaves. At best, dedicated city entertainment taxes reimburse the city for stadium-related public-safety and traffic-management expenses. A large area of downtown that would otherwise be used for housing or office towers will be dedicated to a use that will not generate significant property taxes.

Ever since the City of Minneapolis provided the bonds for Metropolitan Stadium in Bloomington 50 years ago, the City of Minneapolis has come through for the sports fans of this region. Minneapolis paid for the Metrodome. If you love Ricky Rubio as much as I do, you owe a big thank you to Mayor Sayles Belton and the Minneapolis City Council. (If you are a Minneapolis taxpayer, you may not be as grateful). And don’t forget that 40 percent of the Hennepin County tax for Target Field comes from Minneapolis.

Dual responsibilities

In the past, there was a healthy understanding between the State of Minnesota and the City of Minneapolis. City leaders accepted a responsibility to play a leadership role for the region, and the state acknowledged the importance of Minneapolis to our state. Sadly, those days appear gone. A year from now, as the state faces its next budget crisis, rest assured that the Legislature once again will be  debating the reduction or elimination of local government aid for Minneapolis.

The best idea to date for funding a new Vikings Stadium is the proposal by St. Paul Mayor Chris Coleman for a two-cent surcharge on every drink in every bar in Minnesota. Republicans could label such a surcharge an “entertainment impact fee.”  Democrats could support it on the grounds that new gambling revenues could be dedicated to repay our school districts.

If all else fails, a statewide referendum could be held this November. Maybe it could be the one issue in November that unites Democrats, Republicans and independents.  After all, we are all Vikings fans. 

Paul Ostrow is a former member of the Minneapolis City Council (1998-2009), who served as the council’s lead on Target Field. He served as council president from 2002-2005 and as budget chair from 2006-2009.

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Comments (7)

  1. Submitted by Hiram Foster on 03/07/2012 - 09:35 am.

    The stadium

    I think Mr. Ostrow has it mostly right. The stadium is a state, not a municipal asset, and the state should pay for it. The widely accepted notion that the stadium benefits Minneapolis residents is simply untrue. The reasons for this can be pretty complicated, but can be summed up only a little unfairly by asking Minneapolis, with respect to the Twins Stadium, “Since the opening of the Twins Stadium, how many checks have you seen from the Twins?” The logic applies with much more force to a potential Vikings Stadium, which unlike the Twins Stadium, will rarely be used.

  2. Submitted by Paul Udstrand on 03/07/2012 - 09:47 am.

    Listen to Ostrow

    MPLS simply doesn’t have the economic base to provide a subsidy this huge. They don’t even have the base to provide a $55 million subsidy, let alone over $300 million. Right now MPLS has to pull $1.5-2 million a year out of it’s general revenues to make up for revenue shortfalls at the Target Arena. Rybak’s stadium deal will require $16 million, and that’s if they can get the $55 million off their books somehow, otherwise it’ll be more. In the last 50 years MPLS has dumped around $90 million into sports subsidies, and gotten $30 million back in tax revenue. A new stadium will NOT change that ratio, it will NOT increase tax revenue for MPLS. They’re simply trading in a $55 million debt for a $300 million debt. They’ll be pulling $16 million out of other accounts to make up the difference.

    As for construction jobs, I’d like to know how the deal guarantees that 50% of the construction jobs will to MPLS residents? After all, if they don’t, the fair people of MPLS are going to be paying $150 million bucks to create jobs for folks from Orono and Hopkins… which is very nice of them.

  3. Submitted by Cynthia Daggett on 03/07/2012 - 10:40 am.

    Now here’s an idea!

    Fine – Minneapolis pays for the stadium. And all the money the use of it generates stays IN Minneapolis. The rest of the state doesn’t want to contribute to the cost? Fine. But as the friends of the little red hen learned so long ago, they shouldn’t then be able to reap the benefits either. Adding a 2 cent – or even 5 cent “impact fee” per bar drink sold sounds like a great idea to me as well, but let’s be sure to include the concessions in the stadium on that!

  4. Submitted by Jane Pattinson on 03/07/2012 - 11:13 am.

    Stadium

    The concept that Mark Dayton has that “pull-tabs” will generate enough revenue to help fund a Vikings stadium is preposterous. How many people know what pull tabs are, much less purchase them? I had seen signs on the outside of bars advertising them, but thought that they were referring to canned beer. I don’t frequent bars or other places where pull-tabs are available and would never purchase them. I am certainly not alone in this. Mr Ostrow and others like him must understand that the 1980s and 1990s are over. Minnesota will not have a large enough population to pay off the enormous debt generated by the proposed Vikings stadium and I’m very, very concerned about this. The Twins stadium was a mistake—The proposed Vikings stadium is a disaster on multiple levels.

  5. Submitted by Jared Hoke on 03/07/2012 - 11:27 am.

    IT’S WORSE THAN UNFAIR

    I think that any public or semi-public funding proposition that depends on vice is a bad deal. I grieve that what was once considered a criminal enterprise is now invited into our lives on a grand scale, and guess what? We have become -predictably- dependent on it. And now, the “slippery slope” has -again predictably- become steeper and the slide downward faster. In that context, the Viking stadium “deal” should be stoutly denied. Let those who want it pay for it. If there aren’t enough of them, let it go. We have more serious things to do, like rebuild our infrastructure and fund the training of our children. THAT is where the future lies, and where we need to place our emphasis … not on more diversion.

  6. Submitted by James Hamilton on 03/07/2012 - 01:53 pm.

    No, not at all.

    “For the over 90 percent of Minnesotans who do not live in Minneapolis, this is a pretty sweet deal. You might be a bit uncomfortable with this use of public money, but at least it won’t be your money. If you are not a gambler and if you don’t live or work downtown, you get to enjoy the Vikings pretty much for free.”

    Wrong. Any revenue that comes to the state is our money, by definition, whereever we live. Every revenue source we tap to pay for any specific project is a revenue stream not available for any other use. These streams are not unlimited. In fact, it is likely that any new revenue source will be comprised, at least in part, by revenue that we already received. E.g., electronic pull tab spending that replaces lottery purchases.

    Science fiction author Robert Heinlein was well known in his later years for his use of the acronym TANSTAFFL: There ain’t no such thing as a free lunch. That’s still the case.

  7. Submitted by Rod Loper on 03/08/2012 - 10:37 am.

    Minneapolis Vikings?

    See how the outstaters and suburbanites would go for that. Ostrow is spot on.

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