Obama budget could disrupt funding for new stadium

Media is abuzz with speculation whether President Barack Obama’s budget proposal will hit funding of new stadiums?

“If President Obama has his way, the nation’s taxpayers would not help finance a new arena proposed for the Milwaukee Bucks professional basketball team,” writes Elaine S. Povich in USA Today.

“Nor would taxpayer-financed, tax-free bonds be used to help finance a new stadium being discussed in St. Louis for the NFL Rams, or in Oakland for a new complex aimed at keeping the area’s professional football, baseball and basketball franchises from leaving town,” adds Povich.

“President Barack Obama is using his budget to take on some of the most loathed people in sports – team owners threatening to bolt town if taxpayers don’t help build a new stadium – and it could put Republicans in a tough spot,” Patrick Temple-West says in an article in Politico.

“The budget proposal… would eliminate tax benefits that make it easier for cities to raise money for new, luxurious sports facilities,” Temple-West writes.

“These tax breaks have funded billions in stadiums and arenas, including almost $1 billion of tax-exempt debt for the new Yankee Stadium and about $325 million of tax-exempt debt for the Dallas Cowboys’ $1.3 billion stadium,” he adds.

The proposal comes as many team owners are pressing cities and states for new facilities, with some threatening to move elsewhere if they don’t get them. State and local officials are wary of seeing pro teams depart, taking prestige and tax revenue with them. But they are also taxpayer-minded and budget-conscious.

Obama’s proposal is unlikely to become law, but it may be more designed to spark a political debate that would force Republicans to decide whether they want to stand up for a tax break that some conservatives deride as a corporate handout.

The article in Politico explains how Obama’s proposal may work in the instance of it becoming a law:

“Under current law, governments can use the proceeds from tax-exempt bonds for private activities, such stadium projects, unless more than 10 percent of the debt service comes from a private business, and more than 10 percent of the use of the facility is attributed to a private interest. Both have to be true for the exemption to be denied,” the article explains.

“As part of its fiscal 2016 budget request, the Obama administration is proposing to change this dual test for sports facilities by focusing the exemption only on the question of how much the facility is used by a private interest,” it adds.

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