Thursday, July 30, 2015

Structural deficit improves, but still relies on accounting tricks

Now that Governor Walker has vetoed parts of the 2015-17 budget, signed the rest of it, and gotten out of town on the campaign trail, the Legislative Fiscal Bureau has re-crunched the numbers to take a look at how this budget and the next one shapes out. And on the topline, these numbers seem to be an improvement over the 2017-19 structural deficit that was reported in the budget that made it out of the Legislature earlier this month, and has some more breathing room in the current budget.

Net balance, 2015-17 budget, from Legislature
FY 2015-16 +$73 million
FY 2016-17 +$22 million

Net balance, 2015-17 budget, after guv vetoes
FY 2015-16 +$96 million
FY 2016-17 +$66 million

Structural deficit 2017-19 budget, from Legislature
FY 2017-18 -$92 million
FY 2018-19 -$204 million
TOTAL DEFICIT $296 MILLION

Structural deficit 2017-19 budget, after guv vetoes
FY 2017-18 -$27 million
FY 2018-19 -$183 million
TOTAL DEFICIT $210 MILLION

In addition, the structural deficit figure is lower than the $490 million reported earlier this month related to an accounting trick being done on per-pupil school aids (you may remember that Walker proposed cutting this by $150 a student in his original budget, a move that was reversed by the Joint Finance Committee after large amounts of complaints). As the LFB mentions:
Of this [per-pupil] amount, $127 million would be paid on a one-time delayed basis on the second Monday in July of 2016, but would be considered as moneys appropriated in 2015-16 [school year]. Aid for 2016-17, equal to $211 million, would constitute base year funding for the 2017-19 biennium. Thus, $127 million should have been removed from each of 2017-18 and 2018-19 in the July 7 exercise.
Of course, the structural deficit also assumes that those per-pupil aids will stay at that 2017 level for the following two years while most other costs go up, so…good luck with that.

What this "lower" structural deficit doesn’t take into account is Walker and WisGOP's biggest budget trick of them all. The Wisconsin Budget Project explains more in their excellent summary of the recent projections.
The latest calculations continue to understate the magnitude of future challenges because the budget bill assumes an unrealistically large amount of funding that agencies will lapse to the state treasury over the next four years – including $741 million in the 2016-17 fiscal year, and almost that much in each year of the 2017-19 biennium. As I explained in a July 8 blog post, the assumption that state agencies will lapse more than $2 billion over a 3-year period is a convenient way to make the structural deficit look relatively manageable, compared to many of the past structural deficits. However, it also means that the structural deficit figure by itself is no longer a very good indicator of the state’s future fiscal challenges, because that figure leaves out the immense challenge of lapsing so much funding year after year.
There’s also $349 million in lapses baked into the 2015-16 budget AFTER the large amounts of cuts that are already being felt across state agencies (like last week's layoff of 83 workers at UW Colleges). By comparison, while Wisconsin’s Annual Fiscal Report from last October says the Fiscal Year 2014 budget ended up lapsing $345 million, there were no major cuts in appropriations in that budget, so it had more ability to have lapses from job vacancies and other measures.

The FY 2013 budget did lapse nearly $750 million, but that was due to two reasons that do not apply today. The first was Act 10 “savings” and large amounts of retirements of higher-priced, veteran workers in light of that union-busting measure, and the second had to do with $263 million being ADDED to the budget after it was signed into law, which artificially increased the lapses. The 2012-13 budget actually overspent its planned amount by $54.4 million, but was bailed out by a one-time bump in revenues at the same time (a bump which was promptly blown on two rounds of Koo-Koo/Walker tax cuts that have put the state in the fiscal bind it has today).

So unless there’s another Act 10 or shocking economic boom coming, bet on this budget and the next one continuing to be wracked with deficits and likely service cuts…unless the leadership in Wisconsin can be changed.

Tuesday, July 28, 2015

"Low" Wisconsin unemployment ain't because of job growth

I was heading home from work today with my wife, who likes to listen to MSNBC on the satellite radio sometimes. By coincidence, she landed on the Ed Show just as he was wrapping up a segment comparing Wisconsin's economic outcomes with Dem-led Minnesota's (as I've mentioned many times here, Fitzwalkerstan has been getting its economic ass kicked by our neighbors to the West). On the show to stick up for Walker/GOP "governance" was a Koch whore Heritage Foundation hack named Genevieve Wood, and one of her claims was "Scott Walker can't be doing all bad, unemployment is 4.6% in Wisconsin!"

This is where I remind you that Wisconsin's low unemployment rate has little to do with Walker's economic policies succeeding....unless you count driving down the work force by 40,000 in the last 5 months as "success." This exodus from the work force is the difference between Wisconsin's unemployment rate being the reported 4.6% instead of 5.9%, which it would have been with the same amount of jobs today, and the same work force in January.

Making this adjustment drove me to expand on that thought when the state-by-state unemployment figures were released last week by the Bureau of Labor Statistics. I knew that Wisconsin's work force had risen in the later half of 2014, so I wanted to see if this recent dropoff of 40,000 workers was a sort of reversion to the mean. I also wanted to see if Wisconsin's changes were unusual compared to the rest of the Midwest, which has generally had lower population growth than the rest of the nation over the last couple of decades because of deindustrialization....and because it gets really cold here in the Winter. So I took the most recent labor force figures from the June 2015 report, and compared them with the numbers from June 2014 for the Midwest, and here's what I found.

Change in labor force, June 2015 vs. June 2014
Minn +1.91%
Ind. +0.52%
Ohio +0.33%
Iowa +0.05%
Mich -0.14%
Wis. -0.32%
Ill. -0.41%

So Wisconsin has indeed lost some of its work force in the last 12 months (9,800 in total), and that puts them at 6th out of 7 in the Midwest. And contrast that with Minnesota, which grew its work force by the most of any Midwestern state, likely getting some of that increased work force from Wisconsin.

Which then made me wonder what the unemployment rate would have done if the labor force numbers remained the same, so I decided to crunch those numbers. You crunch those numbers, and here's what comes up. Yes, I know that the number of jobs would change because of the changes in population and income, but just go with it for a moment.

What I'm doing is comparing the reported June 2015 unemployment rate, and then using the total "employment" numbers for June 2015 (based on the household survey) and then using the June 2014 labor force figures to impute a second unemployment rate. We also can separate these two factors into why the reported unemployment rate has changed in the last year

Reported unemployment rate, June 2015
Iowa 3.7% (-0.7% vs June 2014)
Minn 3.9% (0.0% vs June 2014)
Wis. 4.6% (-0.8% vs June 2014)
Ind. 4.9% (-1.0% vs June 2014)
Ohio 5.2% (-0.4% vs June 2014)
Mich 5.5% (-1.6% vs June 2014)
Ill. 5.9% (-1.0% vs June 2014)

Imputed unemployment, June 2015 using June 2014 labor force
Minn 2.7% (-1.2% employment change, +1.2% labor force change)
Iowa 3.7% (-0.7% employment, 0.0% labor force)
Ind. 4.4% (-1.5% employment, +0.5% labor force)
Ohio 4.85% (-0.75% employment, +0.35% labor force)
Wis. 4.92% (-0.48% employment, -0.32% labor force)
Mich 5.6% (-1.5% employment, -0.1% labor force)
Ill. 6.3% (-0.6% employment, -0.4% labor force)

Changes the perspective of that "low' Wisconsin unemployment rate that Ms. Wood tried to pass over on the "Ed Show", doesn't it? Wisconsin goes from 3rd to 5th if you keep the labor force the same (and even has a higher unemployment rate than CALIFORNIA by the same metric), and is DEAD LAST in the Midwest for lowering unemployment through actual job growth. And look at how Minnesota's rate plummets to one of the lowest in the nation for the same reason.

This shows how population and work force changes play a major role in a state's economy, because that state's ability to grow gets constricted if it can't attract talent to come to its state and work. And that's what we've gotten from 4 1/2 years of financial mismanagement and mistreatment of workers in the Age of Fitzwalkerstan. And with the UW System and public education being defunded further with this new budget that started July 1, you tell me what's going to happen to reverse this trend of a stagnant Wisconsin work force under Scott Walker, and increase our state's chances of success?

Monday, July 27, 2015

Was $3 worth destroying the state over?

You know that property tax cut Scott Walker and the Wisconsin GOP promised would be part of the state budget? The Legislative Fiscal Bureau gave a look into projections for the average Wisconsinite's tax bill, and let's just say I wouldn't plan on getting a nice Christmas bonus off your December tax bill. Not surprisingly, a main culprit is the funneling of tens of millions of dollars from public school districts to vouchers.
The Legislature made several changes to SB 21 [the state budget bill] that affected the estimated property tax levels for school districts. Under Act 55, districts will be able to count incoming pupils who begin participating in the Racine or statewide private school choice programs in the 2015-16 school year or thereafter for revenue limit and general aid purposes. Act 55 also provides a revenue limit adjustment for consolidated school districts. Modifications were also made to per pupil payments and estimated participation in the independent charter school program and private school choice programs, which would affect the backfill levy associated with those programs. Compared to the Governor, these modifications are estimated to increase property tax levels by $21.0 million in 2015(16) and $23.5 million in 2016(17) for school districts and by $0.7 million in 2015(16) and $0.9 million in 2016(17) for tax incremental districts.

As a result of the preceding changes, gross property tax levies are estimated to increase on a statewide basis by 1.9% in 2015(16) and 0.8% in 2016(17), and net tax levies would increase by an estimated 1.1% in 2015(16) and 0.9% in 2016(17). These tax changes would translate into tax bills for a median-valued home estimated at $2,830 in 2015(16) and $2,828 in 2016(17). These represent decreases of $1 (-0.04%) in 2015(16) and $2 (-0.07%) in 2016(17).
THREE WHOLE DOLLARS OVER TWO YEARS???! That won't even buy a gallon of milk.

Hope THAT was worth fucking over public education, local government services, and having our roads become more likely to be filled with potholes. Oh, and because of (right-to) work-for-less, the repeal of some prevailing wage provisions, and higher co-pays for insurance (if you're a public employee), you'll be likely taking home a lot less than the $3 in property tax you MAY save. I'd much rather have my taxes go up and live in a state and community that's growing and caring about its citizens than getting this insulting pittance of a tax break. And if you don't feel the same, you are one pathetic dead-ender.

Had enough, yet?

More Bucks arena sliminess should make Assembly Dems play hardball

Tomorrow's the big day to see if the Bucks arena bill will pass the State Assembly, and on the day before the big vote, Steve Horn and Michael Arria wrote an in-depth piece in the online site Truthdig going over some the behind-the-scenes dealings with this bill. It's an excellent read.

The article first explores the close connections Bucks co-owner Marc Lasry has to the Obama White House and Hillary Clinton's current campaign, along with former Bucks owner Herb Kohl's involvement in the team and the project. But the more damning stuff on the Dem-related seems to come from another recent Bucks co-owner, Wes Edens, who not only is a billionaire that's looking for a public handout, but is accused of making some of it at the expense of some of Milwaukee's poorest people.
Activists from the group Common Ground in Milwaukee have decried Edens as a slumlord for profiting from over a dozen foreclosed homes in Milwaukee via a company that Fortress Investment Group owns a majority stake in, Nationstar Mortgage. Edens serves as Nationstar’s chairman. Common Ground has launched a campaign called “Fair Play” and written a report titled “Envisioning Fair Play,” calling for public subsidies to go toward sports playing fields that are in terrible condition in Milwaukee County’s poorest communities.
However, Edens comes off as a choirboy in the article compared to the slimeballs at the Metropolitan Milwaukee Association of Commerce. Not only has the pro-Walker MMAC been a major promoter of this project (because there's nothing those oligarchs love more than to take profits at taxpayer expense), but it's created an Astroturf front group called "Play it Forward" to try to trick the average person into thinking this arena has strong community support. Truthdig points out that Play It Forward has deep connections with current and former Walker Administration officials, lobbyists, and other upper-crusters, and the MMAC's buddies include a few familiar names to those of you who follow this blog.
A June 9 press release disseminated by Play It Forward announcing a rally lists Buddy Julius as the contact person; Julius runs the public relations and lobbying group Tthe Firm Consulting. He previously worked as a lobbyist for the Metro Milwaukee Association of Realtors, another founding member of Play It Forward along with the MMAC. The Firm’s website lists the MMAC as one of its clients.

Julius’ co-partner at The Firm is Ryan Murray (!), former deputy secretary and chief executive of the scandal-ridden Wisconsin Economic Development Corp. (WEDC) for the Walker administration, former deputy chief of staff for Gov. Walker and policy director for Walker’s 2010 victorious run for governor over Barrett. Murray also previously worked as communications director for Republican Senate Leader Scott Fitzgerald, a key point man for the Bucks’ arena effort. Fitzgerald’s younger brother and former Wisconsin Legislature colleague, Jeff, (!)now lobbies for the Bucks.

Metadata reviewed by Truthdig for the June 9 Play It Forward press release shows it was actually written by Steve Baas, one of the two MMAC registered lobbyists for the arena subsidy. Andrew Davis, the other MMAC lobbyist registered to lobby on behalf of the Bucks, formerly worked as director of external relations for Walker before getting the MMAC lobbying gig.
But even with all of this GOP-related lobbying, apparently a number of Democratic votes will be required to push this through, despite Republicans having a 63-36 advantage in the lower house of the Legislature. Dem Assembly Leader Peter Barca says the Dems still have a few demands they'd like to see, and a Milwaukee Business Journal story mentions that Barca will put forth a few Dem amendments to the bill. The biggest change to the Senate bill would be the inclusion of a "meaningful jobs" requirement for jobs associated with the Bucks arena.
The possibility of the Bucks agreeing to pay "living wages" once the project is complete was discussed by state Senate Democrats, but never reached the bill that a bipartisan Senate approved.

Support from at least 15 Democrats will be necessary for the arena-funding bill to pass the state Assembly, where Republicans hold a 2-to-1 advantage. Many out-state Republicans are expected to oppose the state contributing up to $4 million per year to paying arena construction debt (now reduced to $3.5 million with the $2 ticket tax offsetting an estimated $500,000 of the state's contribution) ....

It was not clear whether Barca’s reference to “meaningful jobs” was the same as wage and local-hiring requirements sought by a coalition of unions, community and faith-based organizations in Milwaukee called Alliance for Good Jobs.
Published reports indicate that around 15 of the Assembly's 36 Dems will be needed in order to have any Bucks bill pass, and Assembly Majority Leader Jim Steineke indicates that this will happen tomorrow.
Steineke says he 'fully expects' to have enough votes to pass the measure when the Assembly convenes at 11 a.m. Tuesday.

"This is something I grudgingly came around on, because I do think it overall is a good deal for the state," he said. "When you look at just the economics of if, the amount of money that we put into it is far less than the money that we get back. If we do nothing, the state loses revenue. And that's just something that we can't afford right now, so I do support the overall deal, but I do also get the concerns of the people of Brown County."

But some lawmakers, like State Rep. Eric Genrich, D-Green Bay, say their constituents don't support it.

"Especially in the context of this $250 million cut to the UW public colleges and universities," said Genrich. "To give $250 million of taxpayer money to billionaire owners of the Milwaukee Bucks is just tough for a lot of taxpayers and citizens to take in Green Bay and Northeast Wisconsin."
Interestingly, in the Fox 11 report out of Green Bay, Kaukauna's Steineke may be one the few people from northeastern Wisconsin that will vote for the bill. Fellow Republican John Macco of suburban GB expresses reservations in the story about forcing state taxpayers to fund the Bucks arena, in light of no state funding being put into the recent Lambeau Field renovations, leaving Brown County to have to put in a 0.5% sales tax by themselves to help fix up the home of the Packers.

I also don't remember the Packers bill having the level of sketchiness that's been associated with this Bucks arena bill. I just scratched the surface of Horn and Arria's Truthdig article, and as mentioned before, read the whole thing if you got a chance. If people like those oligarch scum are spending so much time and effort trying to shove through this Bucks bill, you know it can't be a good thing. Barring major concessions on issues involving more funding for Milwaukee jobs and schools, I would strongly encourage Rep. Barca and other Dems in the Assembly to make the GOPs be the ones that vote for this corrupt deal as it stands now. And they can do so by at least demanding that some Dem amendments get through (making the Senate have to vote for the amended bill, and giving more time for stories like Horn's and Arria's to come out), or else say "NO SALE" to the whole thing.

A mistake Dems have frequently made in this state over the last 4 years is to give cover to GOPs on some really bad bills, thinking it makes them look like "nice guys" and "bipartisan problem solvers." How's that worked out for ya at election time? This was the baby of Scott Walker, his Milwaukee oligarch supporters, and the Bucks' billionaire owners. Make them be the ones that put up for it, and not the average Milwaukee taxpayer.

Sunday, July 26, 2015

Here's more ammo for Trump on Walker's failing record

Here's another one to add to the list of Scott Walker economic failures. The Philadelphia Federal Reserve updated its figures for the coincident indexes of all 50 states last week, then released the June coincident indexes on Friday. When put in perspective over the course of 4 1/2 years under Walker, it keeps Wisconsin in the cellar for growth in this index when compared to our Midwestern neighbors.



On Tuesday, the Philly Fed will update its leading indexes, indicating what it expects the economy to do in all 50 states over the next 6 months. We'll see if there is a change for Wisconsin from the outlook that was there in May, where we were a Midwestern standout for a bad reason.



So if Donald Trump wants more smack to lay down on Scott Walker's economic record in Wisconsin, here you go Don!

The ongoing foolishness of (mo)Ron Johnson

After a nice afternoon at AtwoodFest, I got home to unwind and watch the Brewers game, only to be interrupted by some right-wing PAC running an ad which has already been rated as a "pants on fire" lie by the right-wing leaning "Politifact" at the Journal-Sentinel. I don't know who these militarists are trying to reach with this bullshit, but it's not anyone who lives above ground.

That ad also led MSNBC's Chris Hayes to run this segment (h/t to Democurmudgeon for having this clip), which includes a guest appearance by Ruth Conniff of the Progressive, to go over the foolishness of the Senator this PAC is trying to prop up, Wisconsin's own (mo)Ron Johnson. They start by going into one of (mo)Ron's recent embarrasments, where he dictated a ridiculous theory to U.S. Secretary of Energy and nuclear physicist Ernest Moniz about a scenario that seems to have come out of a sci-fi magazine. And then Conniff reminds us of (mo)Ron's other greatest hits.



And let's not forget one of my favorites, in the middle of BENGHAZI hearings in January 2013, the (mo)Ron Senator admitted he hadn't done his homework as he tried to interrogate then-incoming Defense Secretary John Kerry
Johnson: Okay. Will you work with me then, on an ongoing basis, so we can get that behind us, so we can find out what actually happened, and then we can move beyond that? I mean, can you just make that commitment to me?

Kerry: Well I think, Senator, in all fairness, we do know what happened. I think it is very clear — were you at the briefing with the tapes?

Johnson: No.

Kerry: Well, there was a briefing with tapes, which we all saw — those of us who went to it — which made it crystal clear.
We sat for several hours with our intel folks, who described to us precisely what we were seeing. We saw all of the events unfold. We had a very complete and detailed description.
Oh, but Sen. Johnson KNOWS what happened.....because he was told the "truth" by the same neocons/Israelites at the Restoration PAC (who I'm sure have no financial or political interest AT ALL). I think one of the best responses to this week's absurdities of (mo)Ron Johnson was expressed by State Sen. Lena Taylor of Milwaukee, who responded to Johnson's statement on Icki McKenna's show that liberals think Milwaukee children are "idiot inner-city kids" who don't deserve better opportunities.
As a product of the Milwaukee Public School System, I find Senator Ron Johnson’s comments unfitting of the office of a United States Senator. I currently live in the same Milwaukee neighborhood in which I was raised and represent many of the great and hard-working families and children of MPS. These students need the same support, opportunities and respect afforded suburban districts by many of our elected officials. They need legislators that will fight to keep funding in their schools and quality teachers in their classrooms. Instead, these children are treated as political pawns. Senator Johnson needs to take ownership of his words. Hiding behind what he called sarcasm, Johnson pawned off his views on liberals and Democrats. In the more than a decade I’ve represented Milwaukee, I’ve never heard a fellow Democrat call inner-city school children idiots. However, I have heard the word used often to describe some politicians and their actions. - State Sen. Lena Taylor
Then again, (mo)Ron Johnson and the dwindling handful of losers who still support this guy are the living embodiment of the Dunning-Kruger effect.
The Dunning–Kruger effect is a cognitive bias in which an unskilled person makes poor decisions and arrives at erroneous conclusions, but their incompetence denies them the metacognitive ability to realize their mistakes. The unskilled therefore suffer from illusory superiority, rating their own ability as above average, much higher than it actually is, while the highly skilled underrate their abilities, suffering from illusory inferiority. This leads to the perverse situation in which less competent people rate their own ability higher than more competent people. It also explains why actual competence may weaken self-confidence: because competent individuals falsely assume that others have an equivalent understanding.
God, we need Russ back in the worst way.

Saturday, July 25, 2015

Rep. Weatherston, Bruce Murphy with updates on Bucks bill

I wanted to give you a couple of updated takes on the Bucks arena bill, which is still scheduled to be debated in the Assembly next Tuesday. The first comes from State Rep. Tom Weatherston, a Republican who represents suburban Racine. Weatherston has been at the forefront of trying to end the 0.1% Miller Park sales tax in the Milwaukee area, and wrote an intriguing press release explaining what he sees as the difference between the Miller Park bill from 20 years ago, and the current Bucks bill. The first contrast that Weatherston makes is that there is a sunset to how long most government payments will be made to the Bucks arena, as opposed to the open-ended Miller Park tax.
First, the Miller Park bill created a sales tax in Milwaukee, Racine, Waukesha, Ozaukee, and Washington Counties. And, like any tax, once it’s established it’s hard to make it go away. Just look at news accounts regarding the stadium tax over the years. On January 7, 2005, the Stadium Board reported, “the stadium tax remains on track to end in 2014.” Then on March 4, 2008, a stadium consultant reported that, “the sales tax might extend to 2017.” Two years later in 2010 financial projections suggested that the Miller Park stadium sales tax will be paid off “between 2016 and 2018.” Three years after that in March of 2013, a forecast said the Miller Park sales tax could end “as soon as 2016 or as late as 2020.” In March of this year the financial advisor to the Stadium District said in a letter that “we believe the District should be able to satisfy all of its outstanding obligations between 2017 and 2020.” The Bucks Arena bill does not create a new tax.
While some of that delay in ending the Miller Park tax is due to the two recessions that hit the area especially hard in the 2000s, Weatherston is mostly right o this point. The only direct tax money designated for the Bucks arena is through the Wisconsin Center District, and that is in the form of hotel and rental car taxes that are already in place.

Weatherston goes on to note that unlike Miller Park, the Bucks arena bill's taxpayer costs are merely for construction, are capped at a set figure, and will not include ongoing maintenance. All of those issues has resulted in a rising price tag that taxpayers have had to shell out for the Brewers stadium over the last 2 decades.
Next, the Miller Park legislation contained no taxpayer protections and set up a Stadium District with little oversight. The legislation that made Miller Park possible said that taxpayers were liable for $160 million of the estimated $250 million in construction costs with the Brewers making up the $90 million balance. But by the time the stadium construction was completed, taxpayer liability increased to $310 million when construction costs ballooned over the life of the project to nearly $400 million. Cost overruns were picked up courtesy of you, the taxpayer, because there were no protections in the bill. The Bucks Arena bill limits state taxpayer liability to $80 million, cost overruns are paid for out of the owner’s pockets.

Finally, the lease is where the insult was added to the injury to the taxpayers after the Miller Park bill was passed. Taxpayers are treated as an unwitting third party to the lease. The Stadium District as the landlord sticks taxpayers with the bill for a large portion of the costs of maintenance and upkeep. The lease requires the team to pay rent, yet the rent they pay doesn’t even cover the maintenance costs of Miller Park. What kind of landlord does that you ask? The same kind of landlord that plans to buy two more brand new scoreboards, the second one in the final year of the lease, at a cost of $6 million each. Further, did you know taxpayers paid a good chunk of the costs for the “mini-Miller Park” officially known as Helfaer Field (the Little League Park in the Miller Park parking lot) ?.... The cost of the field was $3.1 million with $2.1 million coming from the Helfaer Foundation. Taxpayers and the team were liable for a 70/30 split respectively for the remaining $1.1 million. Is this maintenance and upkeep? Under the Bucks arena legislation, after the arena is built, maintenance and upkeep and improvements are the Bucks’ responsibility, not the taxpayer’s.
I'll have a bit of a quibble with Weatherston's comment about the Bucks bill not paying for improvements, because the current Bucks bill still plans to spend $10 million to fix up the Bradley Center over the last two years that the Bucks would play in it (it's provision b on Page 3 of the 2.0 bill, and that hasn't been amended as of this time). But otherwise, I think these points are spot-on, and are improvements over the Miller Park bill that Weatherston calls "the model of what not to do" when it comes to funding sports arenas.

But that doesn't mean there still aren't a ton of goodies and other subsidies in this Bucks bill, as Bruce Murphy of Urban Milwaukee pointed out this Thursday. Here a tasting of the hundreds of millions in tax breaks and other extra perks that the Bucks and this arena will get, as opposed to the typical private business in Milwaukee.
A property tax exemption will extend to nine acres of development by the Milwaukee Bucks, which the bill says “may include offices of the professional basketball team…, parking spaces and garages, storage or loading facilities, access ways, sidewalks, skywalks, plazas, transportation facilities, and sports team stores.” We will never learn the total value of this complex because its exempt and will never be appraised by the city, but even assuming a value of just the $500 million estimate for the arena, that’s nearly $15 million in property taxes lost annually or $450 million over 30 years. (For a real business the assessed value might be lower than this but over time the tax rate would rise and I’m applying current rate for all 30 years.)...

-A sales tax exemption on building materials, equipment and supplies used solely in the construction of the arena. Assuming the cost of materials, etc. for the arena is, say, $300 million, that exemption would be worth about $17 million to the team.

-A sales tax exemption on luxury boxes which will be carried over from current law, which makes luxury boxes for an NBA arena sales tax exempt. In the NBA the average luxury box cost about $206,000 annually. Assuming 30 boxes, that’s six million in income annually, which would have generated $336,000 per year, or about $10 million over 30 years. (An regressive contrast to the $2 ticket tax that's part of the current arena bill, and the sales tax us regular folks already pay on tickets.)

-A sales tax exemptions on all retail within the arena, basically for concessions stands and other retail not normally open to the public. Any licensed bars or restaurants regularly open to the public will be subject to property and sales taxes.
And the Bucks would also be exempt from the state's corporate income tax, which is a nice bonus when you realize NBA teams will be making money hand-over-fist in the coming years with the league's new broadcasting deal. Murphy also mentions that the city of Milwaukee will have to borrow to build its portion of the infrastructure that it's contributing to the arena, and in addition to the Bucks picking up parking revenue from the garage being donated by the City, Milwaukee will lose parking revenue from the structure on 4th Street that it currently operates, but will demolish for the arena.

It is those local government costs, along with the contrast to the loss of education funding and other services in Milwaukee that make me oppose this arena (well, that and the corrupt ties between Gov Walker support of the arena and Walker 2016 finance chair Jon Hammes, whose company stands to make millions on this deal). As mentioned previously, I think a simple local Milwaukee County sales tax is the best way to go if you want to have public funding toward such an arena, and it can even be done in such a way to make Rep. Weatherston happy by killing the Miller Park tax at the same time. In addition, I think having the $4 million cut to Milwaukee County shared revenues to start in 2016, before there is a new arena, is a double-whammy, and the cut should be put off until 2017, when the County could realize the revenues from the new facility to offset some of that cut. Maybe some of the Assembly reps could throw that in as an amendment, which I'd think the Senate would have no problem concurring with.

Both Weatherston and Murphy's articles are good food for thought as this bill goes back for debate at the Capitol next week, and we'll see what the outcome is, and if any changes end up getting made to the arena bill.