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Witnesses Question Value Of Tax-Funded Sports Stadiums
An estimated $18.5 billion in public money was spent between 1990 and 2006 to build 82 sports facilities that otherwise could have been used to rebuild and repair bridges, roads and other decaying infrastructure, a Harvard professor told a House panel Wednesday.
Of that total, about $16 billion came from tax-exempt bonds that reduce federal tax income, Judith Grant Long, an urban planning professor in Harvard University's Graduate School of Design, told the House Oversight and Government Reform Domestic Policy Subcommittee.
In the second of at least four expected hearings on the value and impact of public financing for sports facilities, Long was one of several witnesses who questioned the practice and policy of using public funds for stadiums.
In breaking down her estimates, Long said projected public spending on stadiums would amount to between $1 billion and $2 billion per year, or about $10 million in each city that has at least one.
Long said her estimates of the total public funding of such facilities were higher than those provided by the sports industry because she added such items as the cost of land on which new stadiums were built, infrastructure improvements and ongoing operating costs.
House Oversight and Government Reform Domestic Policy Subcommittee ranking member Darrell Issa, R-Calif., questioned how significant even $18.5 billion, including federal revenue lost from using tax-exempt bonds, was in a federal budget of $2.9 trillion.
Despite the impact it might have at the federal level, Long argued that it could make a difference locally. "It would go a long way toward ensuring effective management, maintenance and upgrading of local public infrastructure," she said.
Eric Solomon, assistant Treasury secretary for tax policy, testified that the "cost to the government of tax-exempt bonds is significant and growing" and said it "is appropriate to review the tax-exempt bond program to ensure that it is properly targeted."
An attempt was made in the Tax Reform Act of 1986 to halt such use of tax-exempt bonds, he said, but it was not successful.
While such financing was prohibited in one type of tax-exempt bonds -- private bond activity financing -- team owners found they could use government bonds to do the same thing.
Government bonds can be used to build sports stadiums if the state or local government decided they have a public use and are retired by general tax revenues, he said.
As the law now stands, Solomon said, his office is powerless to issue a rule prohibiting tax exempt financing for sports buildings. Any restriction is in Congress' hands, he said.
House Oversight and Government Reform Domestic Policy Subcommittee Chairman Dennis Kucinich, D-Ohio, said his panel will have at least two more hearings on the subject before deciding whether to propose legislation. "The public gets the bills and the owners of the teams get the profits," Kucinich said.
Echoing testimony in the first hearing, Arthur Rolnick, senior vice president and research director of the Federal Reserve Bank in Minneapolis, said "sports owners are very good at playing cities against each other" but the economic effect "is a zero-sum game." By Basil Talbott