Wisconsin Gov. Scott Walker's efforts to portray himself as the true small-government conservative in the Republican presidential primary could be complicated by his financing of major league sports inside his state.
Party activists have criticized the governor for months over his support for a plan to devote hundreds of millions of dollars in taxpayer money to a new arena for the NBA’s Milwaukee Bucks, echoing sports economists who have said it amounts to “sports extortion” -- the type of handout to special interests Walker decries on the stump.
A lesser-known deal could further amplify the criticism that Walker is only comfortable spending taxpayer funds when it helps moneyed sports interests.
In 1995, Walker also backed a plan to put taxpayer money toward a new stadium for baseball’s Milwaukee Brewers. Walker was a back-bench member of the state assembly when the then-owner of the Brewers, Bud Selig (who retired from his role as MLB commissioner in January), came to the state legislature looking for money to replace Milwaukee County Stadium. The plan lawmakers ultimately crafted and approved raised sales taxes by 0.1 percent on residents in five counties around Milwaukee. The newly created tax jurisdiction included Walker’s district.
Walker voted in favor of the financing package that included the tax increase, according to Wisconsin legislative records. The tax is still in effect today.
The stadium that would become Miller Park was controversial at the time. Statewide voters had already rejected a proposal to create a special lottery to fund the stadium and the tax increase led to the recall of state Sen. George Petak (R), who represented nearby Racine and cast the deciding vote to fund the project.
The tax increase was scheduled to sunset in 2010. But even before the ballpark opened, cost increases caused analysts to extend it to 2014. At the start of 2015, the state still owed $195 million on Miller Park’s debt and last year, analysts estimated residents would need to keep paying the tax -- or find another source of revenue -- until 2020, if not longer. One local analysis found that the stadium had cost each household in the new tax district nearly $1,600.
It has remained a source of controversy. In each of the last two legislative sessions, groups of lawmakers sought to end the tax increase. The Walker campaign did not respond to request for comment about the 1995 increase.
Walker initially considered raising taxes on hotels and rental cars to help finance the new Bucks arena -- arguing, amid conservative criticism, that those increases did not amount to new taxes.
Unlike the Brewers plan, the Bucks arena proposal, which state lawmakers have substantially modified since Walker introduced his original plan, does not involve direct tax increases on Wisconsinites. Instead, it uses state bonds and county funds to pay for part of the $500 million arena. Combined with the cost of property tax exemptions granted to the arena, taxpayers will pay for more than 80 percent of the project’s estimated cost, with the team and a former owner -- ex-Sen. Herb Kohl (D-Wis.) -- together paying the rest.
The deal does, however, include a $4 million annual reduction in state contributions to Milwaukee County, which could potentially lead to future budget complications if the county cannot collect on unpaid debts to cover its losses. If past deals are any indication, those complications could result in additional tax increases or cuts to public services.
Walker and the team have argued that a new arena will revitalize Milwaukee and have a major economic impact across the state. But research has shown that using taxpayer money to finance sports stadiums and arenas has little if any benefit for state and local economies. As the Brewers tax and other stadium deals have demonstrated, revenue projections often fall short and leave the public on the hook for even more than originally planned.
The primary benefits of tax-financed sports stadiums instead go largely toward franchise owners who get a new stadium, revenue sources and often a sizable increase in the franchise’s value without taking on the project’s debt or financial risk.
The Wisconsin state senate approved the Bucks arena deal last week. The state assembly is scheduled to take up the measure later this month. John Hammes, a member of the investment group that owns the Bucks, now serves as the Walker campaign’s fundraising chairman.