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New plan, new life for Vikings stadium bill

On Sunday, like a bruised and battered Rocky Balboa, a rejiggered stadium proposal rose from the canvas and came back to life.

Vikings stadium sketch

For the past few weeks, the proposal for a new Vikings stadium appeared to be down for the count. A state Senate committee had tabled the bill, and the House had not even scheduled a hearing — while the clock on the legislative session ticked steadily toward an early recess.

But Sunday, like a bruised and battered Rocky Balboa, the proposal rose from the canvas and came back to life.

Giving it a second wind was an agreement between legislators and charitable gambling interests that will provide, everybody hopes, enough tax funds to make payments on the $398 million the state will have to borrow to build the grand NFL behemoth in downtown Minneapolis. Amended legislation overcomes another objection — that the state would have to dip into its general fund if gaming revenues were insufficient — by specifying back-up funding. 

As you may recall, Gov. Mark Dayton’s proposal for the new stadium counted on taxes from an expansion of charitable gambling that would include electronic pull-tabs and online bingo.

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To politicians, this seemed like the perfect solution. After all, the charities themselves had been agitating to add electronic gizmos to their game-of-chance line-ups. Taking the taxes from the gambling expansion for the stadium would allow politicians to avoid assessing new unpopular income or sales taxes and/or using money from the general fund, which would otherwise go to state police, schools and nursing homes

But the charities dug in their heels. For some years, they had been pushing for changes in the way their taxes were assessed.

Unlike most businesses, which pay taxes on net income, the charities had to front a distributor tax before they took in a dime and then fork over a graduated tax on total revenues. They couldn’t deduct the prize money they paid out or any other expenses.

The taxes were squeezing them, according to King Wilson, executive director of Allied Charities of Minnesota, and now they would have to install new, more expensive equipment, which would raise overhead and lower the amounts charities could award game players. That would turn off customers, ultimately reduce business and bring the charities to wrack and ruin — or so they said.

Even after the governor threw the charities a bone — a repeal of the distributor tax and a small reduction in their tax rates — they were far from pleased.

Wilson disputed Department of Revenue projections which anticipated $62 million in taxes annually just from electronic gaming. “I’m not sure enough money will be there,” he said.

Beneath that objection lay another possible implication — that if the taxes weren’t fixed, well, maybe charities wouldn’t find electronic gambling feasible. And then where would the state be?

In press briefings over the past few weeks, House Speaker Kurt Zellers had said that the stadium bill could not go forward unless legislators found that gaming managers were happy.

Now they are. Or, as Wilson says, “They should be.”

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While the bill was presumed dead, Wilson, legislators and the Department of Revenue had been talking behind the scenes. They set an annual target of $36 million in revenues, which would presumably be sufficient to repay stadium bonds.

Then Revenue, the Gambling Control Board and legislators considered four or five different tax structures.

On Friday after the governor kvetched in a press conference about the gambling interests “stalling,” however, a deal fell into place.

As of July 1 — if the Legislature approves, charities will pay a rather steeply progressive tax ranging from 6.89 percent to a top rate of 27.56 percent, but on a net receipts. (Taxes on bingo will remain as they were previously, at a flat 8.5 percent.) And the distributor tax would remain repealed.

“The system worked the way it was supposed to,” says Wilson of the negotiations.

All of this has been incorporated in a revised House bill, which also proposes back-up revenues in case electronic pull-tabs don’t supply enough money to repay bonds: a tax on luxury boxes; a sports-themed lottery game; an admissions tax; and any excess from the Hennepin County sales tax already being diverted from Minneapolis to the stadium.

Monday night the House Commerce Committee will take testimony on the bill. But with this agreement in place, there’s a chance now that the stadium bill could stagger to the governor’s desk before the Legislature adjourns.