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Gov. Scott Walker announces “Pay Their Way” plan for new Milwaukee Bucks arena

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MADISON (WITI) -- Governor Scott Walker announced Tuesday, January 27th a first-of-its-kind “Pay Their Way” plan to grow the economy and protect state taxpayers from the loss of current and future tax revenue generated by the Milwaukee Bucks. It is an announcement that even Milwaukee Mayor Tom Barrett is calling the most significant announcement since the team was sold.

"We're going to help the Milwaukee Bucks pay their own way to a new arena, and we're going to include it in our budget next week," Governor Walker said Tuesday.

Under Walker's “Pay Their Way” plan, a Sports and Entertainment District would be created to provide bonding authority to pay back a $220 million grant for a new sports arena.  The grant will be in the form of an appropriation bond issuance, paid back by projected growth in income taxes from the Bucks, as well as visiting teams, due to salary increases and new TV contracts.  No current base revenues would be used to pay for the bonds, and once the bonds are paid off, the tax growth would return to the state.

"I know there's a lot of talk and speculation before this about the so-called 'jock tax' -- that somehow we would raise that. We're not taking a penny out of money that's paid today by NBA players here in the state of Wisconsin," Governor Walker said.

Currently, the state collects about $6.5 million from NBA players. Governor Walker says those funds will remain in Wisconsin's general fund going forward. In the coming years, they're projecting that those funds will grow. The excess growth above that $6.5 million mark will be what's used to pay for the bonds.

"You can look someone in the face and say 'there's not a penny of new taxes' and 'there's not a penny that comes out of our current revenue stream.' This is all based on growth. This is the ultimate free-market fiscally conservative approach going forward," Governor Walker said.

Without a new arena, the Bucks would likely leave Wisconsin in 2017, costing the state nearly $10 million per year in income tax collections alone.  In addition, if no action is taken on the current Bradley Center, the state is still on the hook for as much as $100 million in maintenance and debt service costs, but without an anchor tenant to drive sales and bring business to the arena and local area.

If the Bucks are sold, the revenue from that sale would first go to pay back these appropriation bonds.

How the “Pay Their Way” plan works:

  • The $220 million would only be released after all other funding for the arena has been secured ($300 million).
  • The growth in income tax revenue due to future contracts and estimated pay increases would be used to pay back the bonds.  No existing base revenues collected from the Bucks or visiting teams would be used.  This protects the state taxpayers and keeps an economic development tool and job-creating engine in Wisconsin.
  • The district would be governed by a nine-member board appointed by the Governor and confirmed by the Senate.  Members would serve staggered, 7-year terms.  Members shall be residents of the state and have executive and managerial experience.  No member may hold elective office or be a candidate for office.
  • If Milwaukee County provides funding for the arena, the county executive shall appoint a board member subject to confirmation by the county board.
  • If the city provides funding for the arena, the mayor of Milwaukee shall appoint a board member subject to confirmation by the city council.
  • The district may not issue bonds, levy, or impose a tax.
  • The district can raise revenue through the operation of the arena and will assume any outstanding Bradley Center Authority debt.

It's a plan that even Mayor Barrett, who has run against Governor Walker twice, says he supports.

"By using the proceeds that the players themselves will be paying in income taxes to help pay their own way, and I agree with that phrase. This is allowing the players to pay their own way to construct this. It becomes a win-win for the state, the community and for the Bucks," Mayor Barrett said.

Former Bucks owner Herb Kohl, and current co-owners Marc Lasry and Wes Edens have said they'll contribute $250 million to the arena project.

Milwaukee Bucks statement on the announcement:

“We thank Gov. Walker for his leadership and commitment to building a transformative, multi-purpose arena that will help revitalize Milwaukee. The governor’s support brings Wisconsin closer to creating a new state-of-the-art venue and entertainment destination that will become an economic catalyst for the entire state. We look forward to working closely with Gov. Walker, the state legislature, local officials and the entire community to make this vision a reality.”

Assembly Speaker Robin Vos (R - Rochester) issued the following statement:

“This is a good starting point for the discussion on how to keep an important economic driver in Wisconsin. By asking the Milwaukee Bucks to pay their own way, we are protecting state taxpayers. However, it’s important to note that in order for the state to be a partner in this endeavor, we would expect the city and county to be part of the equation as well.  I look forward to discussing the proposal with the Assembly Republican caucus.”

The Greater Milwaukee Committee issued this statement:

"The Greater Milwaukee Committee supports transformative opportunities for our community to catalyze economic development and job growth.  The GMC is tremendously proud of the civic, private and governmental leaders who recognize the benefits for our community of focusing on real economic development and coming up with world class business solutions which result in community benefits not only in the region but throughout the State. In an era of economic recovery, the ability to transform and build on the successes of our community cannot be overstated.

We commend Governor Walker for his effective leadership in recognizing that this community and the entire State are poised to be an outstanding participant in this economic development.  The Governor's thoughtful and effective approach to economic development in connection with the arena project with its clear protection of the taxpayers is exactly the kind of world class solutions that make a difference in a community."

As for where the new Bucks arena will be located, we're told the search for a site is ongoing.

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    • grunt

      The old one doesn’t make them enough money. A new one’s design would fix that. They want to make more money from things other than ticket sales.
      Enjoy your $8 cups of beer and $4 hot dogs.

    • Ian

      I’m not a Scott Walker fan, but if he can make this happen, it’s good for the state. Miller Park was a risk but it paid off, as the Brewers have one of the best parks in baseball. If Wisconsin is going to have pro sports, why have second-rate facilities?

  • a

    Instead of us having to foot the bill…how bout you have the players fund the arena with their multi-million dollar contracts.

  • Ben

    Seems like a great plan to help the city. No strong feelings about Walker either way, but I already know Walker haters will find something horribly wrong with this plan. This country cares more about saying who’s right or wrong than they actually do about improving this country.

    • Josh P

      I strongly dislike Walker, but I have to say that this is a very interesting proposal that appears, at least on the surface, to provide a great boost for the downtown area while minimizing the risk and burden on the taxpayers. Hopefully this plan succeeds.

  • Josh P

    Interesting idea from the governor. A lot of the specifics go over my head, but if I understand it, it appears that this plan will provide a lot of business growth opportunity in the downtown Milwaukee area, while trying to minimize the impact on the taxpayers. I dislike Walker, but I hope that this plan is successful for Milwaukee and the state.

    • Mike Karnow

      “it appears that this plan will provide a lot of business growth opportunity in the downtown Milwaukee area”.
      Sure. You know what business will grow? The nearest tavern. The said the same thing about the stadium- that it will provide business growth. Still waiting for that to happen.

  • Ben

    You are an open eyed individual. Seems rare when any politics are involved. I’m part of a union that tells me I have to hate walker. I believe all people have some good and bad ideas. We just need to listen before we judge.

  • JokeEnthusiast

    “However, it’s important to note that in order for the state to be a partner in this endeavor, we would expect the city and county to be part of the equation as well.”

    As a Milwaukee County and City resident, if we’re footing a portion of the bill for anything it better include upgrades to our parks and cultural assets as well.

Comments are closed.

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