Alderman comes up with plan to fund Milwaukee Bucks arena, and it involves sales tax

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MILWAUKEE (WITI) — Milwaukee Alderman Bob Bauman has come out with a plan to help fund a new Milwaukee Bucks arena in downtown Milwaukee — and it involves a sales tax.

“Sales tax is the solution,” Alderman Bauman said.

Alderman Bauman has suggested Milwaukee County create a one percent sales tax.

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Bauman says the money would cover the public funding for the project, as well as other public needs, such as parks, cultural institutions and transit, things currently covered by property taxes. The one percent sales tax would put the sales tax in Milwaukee County at 6.6%, and Bauman believes Milwaukee County’s property tax levy would drop significantly.

“A penny sales tax generates about $125 million a year in Milwaukee County alone,” Alderman Bauman said.

“The arena is going to bring so much more money to the area in the long run.  It`s worth it,” Bucks fan Kyle Malke said.

A new Marquette University Law School poll released Thursday shows 67% of southeastern Wisconsin residents are opposed to helping fund a new arena.

Alderman Bauman acknowledges not all will be on board with his plan.

“If that`s the sentiment then the Bucks leave.  It`s just that simple.  People have to realize that,” Alderman Bauman said.

Americans for Prosperity is one group opposed to Bauman’s plan, issuing this statement to FOX6 News:

“Government should not be involved in paying for sports arenas — period. Sales tax increases should be the last thing considered. The people of Wisconsin are taxed too much as it is, and any sales tax increase in Milwaukee will only hurt the area.”

It is possible Bauman’s plan could go to a referendum. That would require a special election in order to meet the NBA’s timeline. An arena plan must be in place by 2017 — or the Bucks are gone.

It is expected the city and county will be on the hook for about $100 million to help pay for the new arena.

Governor Scott Walker’s funding plan calls for the state contributing $220 million in bonds — with some funds coming from players’ income taxes and $50 million coming from other sources, such as the city and the county.

Some lawmakers are calling Walker’s plan “dead on arrival” due to its price-tag.

Senator Scott Fitzgerald (R-Juneau)’s plan calls for the state contributing $150 million via a loan through the state’s “Public Lands Board.”

Former owner Herb Kohl has pledged $100 million, and the new Bucks owners have pledged $150 million towards this project.

The state’s contribution ($150 million to $220 million), the city/county contribution ($50 million), and the pledges from Kohl and the new Bucks owners ($250 million) combined could come up short of the $500 million needed for the arena. If the state contributes $150 million, the total would be $450 million — $50 million short.

Exactly how much the state will contribute to this project will likely be ironed out in the coming weeks. The state budget is due in June.

Alderman Bauman’s statement on Bucks arena funding reads as follows:

Having closely watched the debate over how to fund a new arena for the Milwaukee Bucks, it appears there is a real risk that this franchise will leave Milwaukee. It appears that the state Legislature has balked at Governor Walker’s original $220 million funding proposal. It appears they are focused on approving a funding package of $150 million. This leaves a funding gap of at least $100 million ($500 million in projected cost, less $250 million in private capital and $150 million in state financing). State legislative leaders have suggested that the city and county come up with this $100 million or what could be an even bigger share if the actual costs of construction run over $500 million.

As far as the city is concerned, coming up with $50 million or more is simply not possible given existing financing tools at the city’s disposal. We cannot use our most effective tool—tax incremental financing—because the arena will be exempt from property taxes. The city has pledged approximately $25 million in assistance, mostly in the form of improved and unimproved real estate. However, contributing real estate does not help meet actual arena construction costs.

I suspect that state legislative leaders know all of this, so their proposal of $150 million in funding is intended to create a funding gap they know the city and county cannot fill. They have set up the city and county as the “fall guys” if the Bucks choose to leave.

There is another approach, an approach extensively discussed by the Cultural and Entertainment Capital Needs Task Force created by the Metropolitan Milwaukee Association of Commerce to review funding options for a new arena, as well as other public needs such as parks, cultural institutions and transit. That approach is a one-cent dedicated sales tax in Milwaukee County to fund the arena, parks, cultural institutions and the Milwaukee County share of transit operating and capital costs.

A one-cent dedicated sales tax in Milwaukee County would completely cover the public share of arena construction costs, as well as ongoing maintenance (which no one has discussed in connection with current funding proposals), would completely fund all parks and cultural institution deferred capital projects, proposed capital projects and the Milwaukee County share of operating costs, and completely fund the Milwaukee County share of transit operating costs and proposed capital projects such as Bus Rapid Transit lines and expanded service to job centers in suburban areas.

This one-cent dedicated sales tax would represent new revenue, although there would be a significant Milwaukee County property tax offset since the Milwaukee County property tax levy is covering the local share of parks, cultural institutions and transit at present. This new revenue would enable Milwaukee County to retain one public good (the Bucks), and place three other public goods (parks, cultural institutions and transit) on a stable and sustainable financial footing for years to come. The constant debate about deteriorating parks, struggling cultural institutions and declining transit service would end.

State legislative action is required to implement this approach. This will represent a new tax. However, the legislature could require a Milwaukee County referendum. The legislature can put the question to the voters and let them decide whether the Bucks are worth keeping and whether stable and sustainable funding for parks, cultural institutions and transit are worth an extra cent in sales taxes.

This approach is not new.  Most major metropolitan areas have dedicated sales taxes for transit, and at least one city, Oklahoma City, has used a dedicated sales tax to pay the public share of an NBA arena. Such dedicated taxes have usually been implemented after successful public referenda.

Yes, the Milwaukee County sales tax would increase to 6.6%, but this would still represent one of the lowest sales tax rates among major urban counties. In addition, the Milwaukee County property tax levy would be reduced by nearly $54 million dollars. The local cost to operate and maintain parks, cultural institutions and transit would shift from property tax payers to consumers of goods and services in Milwaukee County, of whom approximately 25 percent are non-residents.

I hope common sense and reason prevail, and that this proposal gets serious consideration in the Legislature.”

Last week, the Milwaukee Bucks unveiled plans for a $500 million arena, and a $500 million sports and entertainment complex for downtown Milwaukee.

42 comments

  • Jim

    Why don’t the Buck’s new owners take out a loan to finance the rest of THEIR business? Why does the average Joe/Jane have to kick in monies for this? The Buck’s owners stand to make quite the profit on this arena and entertainment complex, yet there won’t be ANY property taxes levied on it? All the favorable stuff is going to these guys who have deep pockets, but apparently very short arms!

  • Kris Herzog

    As long as the tax stays in Milwaukee County, I’m all for it. We need to get rid of the Miller Park tax first. Both teams have changed ownership, and should feed off the teats of the new owners for a while before hitting up the public…
    Or…. Gov. Walker could just rubber stamp the Kenosha deal without comment, and let them build it. As a Racine County resident who doesn’t care about Basketball, I don’t want to fund something that I’ll never take advantage of. And to say that it will provide jobs to my fellow County residents is a joke.

    • 2ECOND

      that’s the problem kris, they lied about the stadium tax being “temporary”. it was supposed to go for 7 years and then stop, but we can all see how that never happened. so if your supporting a tax, just keep in mind it will NEVER go away

  • chris lenske

    This is the lazy way out. They are all smart men, I’d think they could get more creative than a sales tax hike.

  • Shari H

    I took your poll about the proposed arena tax, I needed a space for the words: HELL NO!!!!! It’ll be just like the stadium tax, it won’t EVER go away!! How many extra taxes are we going to have to pay so the. “Big boys” can play??!! I say enough now!!!!!

  • Curt

    A penny here, a penny there, here a streetcar, there a streetcar, The streets are not paved with gold, but have more potholes than the moon has craters. Where will it stop? Look around Milwaukee that used to be an industrial giant, where did they go? A temporary 4% state sales tax that never ended. A Miller Park sales tax that ended in 2012…oh wait no it didnt. Heres an idea use the $125 million that is going to fund the trolly and the budgeted money for the maintenance from what is to flushed to support the shortfall of the revenues. Everyone keeps saying, “but its going to pump so much money into the economy” if it is such a great investment, why arent the two billionaires only limiting their investments. Still waiting for the check for my investment in the Brewer Stadium. I’m sure its in the mail.

  • Geri Dlapa

    If they want a new arena let them pay for it themselves. Why should we be asked to fund this. They make so much money let them fork over the money.

  • rick

    Coming from a small town in georgia where the sales tax is 7%(5% state,1% county and 1% city). I think 6.6 is reasonable but only if the property taxes get reduced significantly. I agree the stadium tax needs to go. There is always some excuse to keep it going.

  • Ray

    While I hate the idea of a sales tax simply funding the Bucks arena, I think it is a good way to generate revenue for other aspects of our our city – the museums, the arts, and our parks. These are vital to our community – not just the city or county of Milwaukee, despite what others say. Yes, some of this revenue for this is generated from our property taxes currently, but I would gladly have a small sales tax fund these important pieces to our city – every year. Imagine the possibilities with a more money for our museums, our parks, and our transit. This is how Oklahoma City rebuilt itself after the bombings…and how they attracted an NBA team from a much larger city. It’s one thing if you don’t care for pro basketball, but this tax may have merit even without the Bucks, and it’s time to address it. If you don’t find it reasonable to support the parks, the arts, or our museums, then I suggest you move to location where such things don’t exist.

  • s holmes

    Pave an abandoned school lot & you got it. Otherwise don’t let the door hit you on the … on the way out.

  • Robin Nelmark

    Why should we pay for what is clearly a private enterprise deal? I do not support either a local sales tax or funding from the state government to build this. The Bucks want a new arena they need to step up and pay for it.

  • A Yooper

    Bradley Center was free. not too long ago. Now not good enough for ghetto ball. Let them leave. do we really need 11 severely over paid thugs representing Milw.? I There are hundreds of great cities in USA without NBA. We have a awesome city with a lake front unless it rains too much then we pump turds & rubbers into it. No other city can do Harley events, Summer fest and other good family things.

  • Obamasucks

    It might be time for a recall election for alderman Bauman. Why in the hell is the arena going to be tax exempt? If you place a tax on all activities at the arena then it could pay for itself, having the people that use it pay for it instead of taxing everybody for it. Here’s another good one why don’t the NBA kick in they stand to make a lot of money from this too. It’s all B.S.

  • no user

    Here is a novel idea. Why not make the people who will use the place, pay for the place. Raise ticket prices to cover the cost and don’t make those of us who don’t like basketball pay for it. You might even consider not paying multi-million dollar, multi-year contracts for the players. This is only a game, the team salaries should not be in the millions. Meanwhile there is a shortage of money to fund schools and teachers. High school drop out rates running around 50% in Milwaukee and you want to spend taxpayer money on a game? Crime rate in Milwaukee is near the top in the country. The Milwaukee Police Union says we are 200-300 police short and you want to spend money of a game? With this lack of common sense Milwaukee as a dire future.

    Take a look at this CRIME RATE report and decide if you like your odds of being a victim of a violent crime 1:73. http://www.neighborhoodscout.com/wi/milwaukee/crime/

  • CYNIC

    Between Kohl and the new owners, their golf foursomes alone could write a check large enough to pay for this stupid arena. Instead they want to weasel out of it and make a lot of people who don’t even care about the Bucks being here pay for it. Milwaukee is economically diseased, schools are junk, crime is increasing and spreading, roads are a mess, the list goes on and on. But now they’re tripping over themselves so a bunch of college dropouts can bounce a ball around for a few minutes for $5M/year? What a joke.

  • mike

    Part of being an owner is to pay for stuff like that if I needed to rebuild my house the state and county won’t give me money for it we should use that money for school funding and police budgets and other things of that nature

  • Michael

    I agree a tax on the people of Milwaukee County would be the less than ideal solution. The best solution was to allow the Menomonie Tribe to pay for the entire taxpayers portion when they offered to in order to get their casino in Kenosha. That was the huge mistake on Walker’s part. Two complete new venues, a casino and an arena and entertainment complex, totally paid for without any taxpayer’s monies used, increased revenue through taxation on such both the casino and the revenue generated by the new arena and sports complex, not to mention the creation of 10’s of thousands of jobs between the two and income tax revenue and a job story to tell, yet he said pass. Too busy worrying about what the people of Iowa think rather than the people of Wisconsin.

  • Ryan

    1 cent for every dollar = $1 for every $100 spent…seems pretty minimal to me for a professional sports franchise, quality parks, and transit system.

    The current and previous owners are investing a total of $250 in our community. OUR community…we need to do our part too!

  • Tim

    The tax is regressive in that it will only harm Milwaukee County businesses which aren’t doing the best as it is. Why hurt Milwakee job providers at a time when we need MORE JOBS IN MILWAUKEE, not fewer. It would be wiser to use a state-wide tax or better yet, let the owners pay the costs of running their business!!!

  • S J Reshel

    I Don” think I will ever understand the people of Milwaukee. They just do not make sense!! So, What they are saying is they would rather pay higher Property Taxes, than have a $0.01 (one cent) added to the current county sales tax which currently is one of the lowest major Metropolitan Area County tax in the country. Yet, these apparent uninformed people prefer to continue to pay one of the highest property taxes in the country. Do they not know that this one cent will help to elevate this. Also do the people of Milwaukee realize that they will not be the only ones paying this one cent additional tax? Do they not realize that they are only 65-75% of the group paying this one cent extra sales tax, the rest is Out of Towners, Tourist, and other people not from this area, plus this will not just be for the new Arena. There will finally be permanent funding for the County Parks, County Transit, and other worthwhile Community Projects that wouldn’t have to beg for funding any more!!! Do these people not understand how important this is, and what this one cent can all accomplish???? When, Oh When will Milwaukee wake up and start to understand the concept of COMMON SENSE!! Why do people think this is only about the Arena. And by the way, this is an Arena that everyone uses, not just the owners of the Bucks, if I’m not mistaken the Bucks play for the benefit of the fans. I will guarantee you the minute the Bucks are gone, there will be an uproar in this town about who didn’t do enough to keep the Bucks, and Milwaukee again, like usual, only has it’s self to blame!! Ya know, I could go on and on about the whiners in this town, why the heck don’t you all go someplace where everything is perfect all the time, and nothing ever goes wrong, and life is just endlessly amazing…..

    • JokeEnthusiast

      I don’t get it either S J RESHEL. If we must put some skin in the game, a 1% sales tax is a pretty painless way to do it. Considering we already had a referendum on the same sales tax for parks 5 or so years ago and it passed easily, doesn’t anybody remember that? Of course not. The State rejected it and people forgot about it. http://www.jsonline.com/news/statepolitics/33877574.html

      None of the people bemoaning this idea even address the property tax relief and improvements to parks/public amenities that this TINY sales tax would pay for.

      My first choice would have been for the billionaire owners to front ALL of the money. That isn’t realistic and won’t happen. My second choice would have been the equally unrealistic casino fronting the money deal. My third choice is this.

      I think we just found our solution.

  • keith

    If the owners accept public money then they should have random drug testing, just like others that accept public money.

  • Erin

    I’ll just leave this here. econjwatch.org/file_download/222/2008-09-coateshumphreys-com.pdf. It says, in cold hard facts, that publicly funded sports stadiums don’t benefit the local economy or municipality that funded them. These people are billionaires. Why on earth are the taxpayers having to spend our money to fund something that has been proven we won’t benefit from. Here’s my favorite part from the study. “No matter what cities or geographical areas are examined, no matter what estimators are used, no matter what model specifications are used, and no matter what variables are used, articles published in peer reviewed economics journals contain almost no evidence that professional sports franchises and facilities have a measurable economic impact on the economy.”

  • KMAN

    I think some people are missing the big picture here. This isn’t an arena that only the Bucks would get to use. It would be used for concerts, events, expos, other sports teams like Marquette and the local minor league teams, NCAA tournament would come, WI high school sports tournaments could come, you name it, if it can be held in a 15,000 seat arena they can do it there. Additionally it would create a revamped business district. All of these things would bring millions of dollars of revenue for other businesses in the area and a lot of JOBS. This isn’t an arena that would only get used 50 days a year. It would constantly be used. If you hold events there it gives people a reason to visit Milwaukee and spend their money. Take it away and you will have much less tourism and Milwaukee will struggle. The Bradley Center is painfully out of date and doesn’t have the accommodations that prospective event holders look for nowadays. A new arena would give event holders a reason to even set foot in the state of Wisconsin. Where else in the state of Wisconsin would have a state of the art arena like this? This arena would arguably be the best arena in the world that any one would love to come to and you want to give up all that potential business and long run benefit to the success of Milwaukee and job seekers because you’d pay $20 more a year in taxes? The benefits would outweigh that cost. Even if you don’t like basketball, you would still see some residual benefit directly to you. I wish I lived in Milwaukee County so that I could vote yes to this when it gets put on a ballot.

    • Erin

      I’m sick and tired of subsidizing welfare queen billionaires and their greedy need for publicly funded sports stadiums. The facts are in. The studies have been done. There is no economic benefit to communities that publicly fund sports stadiums. NONE. Let the billionaires pay for it themselves.

  • Martin

    so screw the poor and make them pay more taxes for the Bucks..Even though the poor will never be able to afford to see the inside of new arena that they helped pay for…Screw Walker

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