MADISON -- Governor Scott Walker joined state and local leaders, including Speaker Robin Vos, Majority Leader Fitzgerald, Milwaukee County Executive Chris Abele, and Milwaukee Mayor Tom Barrett in announcing a plan to protect state taxpayers from a loss of approximately $419 million, if the NBA relocates the Milwaukee Bucks. The total state contribution will be capped at $80 million, according to a news release from the Governor's Office.
“We’ve considered the financial impacts on the state should the Bucks stay or go, and quite simply, we found it’s cheaper to keep them,” Governor Walker said. “Our plan is the result of a state and local, public and private alliance, and it is developed with the goal of ensuring a good return to our state taxpayers. Under this plan, for every dollar the state invests, state taxpayers will get a $3 return on that investment.”
A news release from the Governor's Office indicates in April 2014, new owners bought the Milwaukee Bucks from Herb Kohl in a deal approved by the NBA and contingent upon the construction of a new arena by 2017. If a new arena is not constructed by 2017, the NBA will buy the Bucks back from the current owners and move the team to another state.
If the team is relocated, there will be a loss to state taxpayers of at least $419 million over the next 20 years due to the loss of current revenue, future growth, and the ongoing costs to maintain the Bradley Center, according to the Governor's Office.
Current and former team ownership committed to fund $250 million toward funding the $500 million arena project. Under this plan, state and local governments will also fund $250 million, or half of the total project costs, toward building the new arena without tax increases or state bonding. Any cost overruns would be paid by the Bucks.
Working together with local leaders, Governor Walker, Speaker Vos, and Majority Leader Fitzgerald developed a plan that will cap the total state investment in the project at $80 million over 20 years. Over a 20-year period, this plan protects $299 million in income tax revenue, including the base and projected growth, according to the Governor's Office.
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How it works, according to the Governor's Office:
- For every dollar the state invests, state taxpayers will get a $3 return through income tax revenue.
- State and local governments will fund $250 million, or half of the total project costs, toward building the new arena without tax increases or state bonding.
- The state puts forward $4 million per year for 20 years, with the total state investment capped at $80 million.
- The city will contribute $47 million through the creation of a TID and paying for a parking structure in upfront cash.
- The county contributes $4 million per year over 20 years through a state debt collection agreement.
- The Wisconsin Center District uses existing revenue streams to finance roughly $93 million in bonding for the plan.
- Caps state contribution at $80 million toward the arena project.
- Caps the total public contribution to the arena project at $250 million.
- Claw back provisions included to protect both the state and local governments. If the Bucks leave they will have to pay back the public investment. The payback will be proportional to dollars contributed.
- Any cost overruns would be paid by the Bucks.
- Maintenance and operations will be paid for by the team.
- The team and its partners will contribute 50 percent of the cost of the project with local funding coming in at 39 percent and the state contribution estimated at 11 percent of the total cost.
- While officials say there are no new taxes, it will require an extension of the Center District Tax, whose money is already committed to other projects for another 13 years.
Benefits of the plan, according to the Governor's Office:
- Protects state taxpayers from losses that would be at least $419 million over the next 20 years, including:
- Base income tax revenue generated by the Milwaukee Bucks and from the visiting teams of $6.5 million per year in state income taxes, or $130 million over 20 years;
- Income tax revenue growth estimated at $169 million over 20 years due to future contracts and estimated NBA pay increases;
- Taxpayer liability for the Bradley Center estimated at $120 million in costs over the next ten years.
- For every dollar the state invests, state taxpayers will get a $3 return through income tax revenue.
- Supports a new arena without tax increases or state bonding.
- Creates or preserves roughly 15,000 permanent and temporary construction jobs.
- Protects state taxpayers by requiring the Bucks to reimburse the public investment should they leave the state.
- The state will benefit from a $1 billion economic development project, which is estimated to create or preserve 15,000 permanent and temporary construction jobs.
The sports and entertainment complex that will be part of the arena project is $500 million -- but that will be paid for via the private sector.
The Republican governor has argued for months that it will cost the state more in lost income-tax revenue if the NBA pulls the Bucks from Milwaukee than it will to pay for a new downtown arena.
"It`s an important part of the state overall, but also something that I can say to lawmakers -- whether they`re in Rice Lake, Rhinelander, or Marinette, or Sheboygan or anywhere else across the state, this is a good deal for lawmakers anywhere in the state," Walker said.
"Forget the Bucks for a second. Put this decision inside a box where we just look at the numbers part of this. Option A, we lose an enormous amount of revenue and there`s a hole in the budget and it`s gonna hit all of us and nobody wants to see that. Option B, we have a lot more revenue going forward. The potential upside is larger than we have had for downtown in terms of economic development -- ever," Abele said.
"What we have here is something I can take to my taxpayers and say `look, we have to make sure this gets done and we have to make sure this gets done in a way that`s fair to you,'" Barrett said.
"I think the more people get to see this, the more they get to chew on the facts, the better this is going to taste," Tim Sheehy, president of the Metropolitan Milwaukee Association of Commerce (MMAC) said.
So will lawmakers vote in favor of this plan? Some lawmakers have said they'd like to see the arena funding plan as a stand-alone measure, separate from the state budget.
"At this point, I would still -- I would feel more comfortable with the arena taken out of the budget process and have it stand alone -- have a good debate," Senator Van Wanggaard (R-Racine) said.
The Milwaukee Bucks have issued this statement:
“We're incredibly thankful for the leadership and commitment of state, city and county officials to put together a viable financing framework for this public-private partnership to build a new sports and entertainment district in Wisconsin. While there is still a lot of work to be done in a short time frame, this is a big step forward in our collective effort to build a transformative economic and cultural asset in downtown Milwaukee. We will continue to work closely with our public partners to make sure this historic effort is successful.”
Milwaukee Bucks President Peter Feigin issued this statement:
"As you may have heard, state, city and county officials made a joint announcement in Madison today regarding a financing proposal for a new sports and entertainment district in Wisconsin. The Bucks are incredibly thankful for the leadership and commitment our elected officials have shown in putting together a viable financing framework for this public-private partnership. While there is still a lot of work to be done in a short time frame, this is a big step forward in our collective effort to build a transformative economic and cultural asset in downtown Milwaukee. We appreciate your continued support and will continue to work closely with our public partners to make sure this historic effort is successful.
We hope to see you this Saturday, June 6th at our Summer Block Party for the unveiling of our 2015-16 jerseys.
Milwaukee County Executive Chris Abele issued this statement:
"I would like to thank the Governor, the State Legislature, the Milwaukee Bucks, the City, and especially my incredibly hardworking and committed team at the County for all their hard work and resilience. Throughout this process, I have focused solely on helping craft a solution that all parties could agree to and that delivers what I truly believe will be a very significant net positive for Milwaukeeans and the State of Wisconsin.
Together, we have struck a deal that not only keeps the Bucks in Milwaukee, but will create jobs, generate millions of dollars in economic activity and property value, and provide a great return on investment for taxpayers.
In an era of often bitter partisanship, Democrats and Republicans came together to produce a monumental outcome that will provide a once-in-a-generation benefit to Milwaukee and the entire state. Today’s agreement to finance construction of a new arena represents a true public-private partnership, with the public investment being split amongst the State, the County, and the City. It is easy to say that we are capable of achieving big things. It is harder to demonstrate. Today we demonstrated that, together, big things truly can be achieved in Milwaukee.
In Milwaukee and Wisconsin, pride in the Milwaukee Bucks is something that crosses all geographic, political, and socioeconomic lines. The benefits of today’s agreement cross all those lines as well. From good jobs to state and local tax revenue to ancillary development, all residents benefit from and have a stake in the construction of the new arena.
The County will continue to be actively involved in this project to ensure the responsible use of tax dollars and to demand that public investments bring a significant public benefit. This sort of vigilance is how, over the last four years, we at the County have dropped nearly a billion dollars off our long-term liability and reduced debt, resulting in credit rating increases and higher levels of service, all without ever proposing a tax increase.
I support this proposal because I strongly believe that the public benefit warranted the public investment. Going forward, I am committed to remaining vigilant to ensure we get that return.
I am eager to share the details on how Milwaukee County has and will contribute to making the new arena a reality. Over the coming weeks, my staff and I will be participating in a number of events to discuss with the public how the new arena will strengthen our economy for the next generation."
Sen. Van Wanggaard (R-Racine) has issued this statement:
“I continue to believe that the proposed Milwaukee arena should be taken up as a separate piece of legislation and be debated on its own merits. Likewise, I will also consider the budget on its own merits, with or without arena funding.
When evaluating any proposed arena plan, my first priority is to ensure that Racine and Kenosha county taxpayers are not subject to any new tax, or further continuation of the never-ending Miller Park tax. In addition, the city and county of Milwaukee need to make a sizable contribution to this project. The economic impact of an arena will be largely localized, and the cost-sharing of the public portion of the project should reflect that.
Further, I want the state out of the arena business – including its current $120 million obligation to the Bradley Center for deferred maintenance and related costs. Taxpayers should not be funding cost overruns, ongoing maintenance, or upkeep and enhancements in an arena.
“Finally, I will evaluate what is best for the state’s economy and bottom line. Whether that means a new arena in Milwaukee, including keeping the Bucks, or maintaining the Bradley Center and losing the Bucks.”
Milwaukee Common Council President Michael Murphy has issued this statement:
"For the most part, the terms of the legislative deal with the Milwaukee Bucks have been negotiated in private. With the announcement that the Governor, the legislative leadership, the Mayor and the County Executive have reached a deal, I have scheduled a special Steering and Rules Committee meeting to allow Common Council members and the public at large to hear details of the proposal from the administration.
This informational meeting will take place Friday, June 5th, at 1:30 p.m. in Room 301B of City Hall.
However, despite today’s announcement, it is still unclear whether the Governor has the votes in the legislature to get the plan approved. If the legislature approves the deal, it will still require approvals from the city, the county and the Wisconsin Center District.
It is my intention that a full and transparent discussion of the details will be aired by the Common Council prior to any vote being taken."
Senate Minority Leader Peter Barca (D-Kenosha) has issued this statement:
“I was not at the table for these negotiations so I’m looking forward to learning the full details of the Bucks arena financing plan. I will be carefully reviewing the details and having discussions with our caucus in the days ahead.
The unfortunate part of this situation is that Republicans have led our state into a fiscal mess that makes all our budgeting decisions more difficult. If Republicans had made better financial decisions like reclaiming our federal health care money, then our state wouldn’t be feeling this painful squeeze and would be more able to invest in such priorities as public schools, our universities and major projects.”
Senator Lena Taylor (D-Milwaukee) issued this statement:
“The Milwaukee Bucks are part of the fabric not only of Milwaukee’s economy, but of Wisconsin’s as well. With over $700 million in player tax revenue collections over the next 32 years, keeping the Bucks in Milwaukee means big bucks for Wisconsin. The revenue from the Bucks arena through basketball games, concerts and other events will stimulate both Milwaukee’s economy and Wisconsin’s economy.
I am disappointed in Governor Walker for having backtracked on his original pledge for Wisconsin to invest $200 million in the deal. Pulling almost 75 percent of the state money off the table while increasing local investment BY five-times is irresponsible. Ironically, Governor Walker did a great job at today’s press conference articulating why this is not just a Milwaukee issue, but a statewide issue, which is why the state must pay its fair share in this deal."
Marquette University President Michael Lovell issued this statement:
"At Marquette University, we are encouraged by the news on the new arena. We appreciate the many leaders who have worked diligently to drive this defining project forward. This is a significant step forward for what will be a historic milestone. We look forward to being the top tenant in the new arena, which will provide a tremendous state-of-the-art facility for our student-athletes. While we know steps remain to approve a final plan, we are confident that the new arena and surrounding developments will lead to long-term value through an increase in jobs, neighborhood stability, and will ultimately make the region a greater place to live, work, play and retire."