Office of the Governor Scott Walker
Office of the Governor, Scott Walker - Press Release

Cheaper to Keep Them: State and Local Arena Plan

For every dollar the state invests, state taxpayers will get a $3 return through income tax revenue

Thursday, June 4, 2015 - Press Release

Madison – Today, Governor Scott Walker joined state and local leaders, including Speaker Robin Vos, Majority Leader Fitzgerald, Milwaukee County Executive Chris Abele, and Milwaukee Mayor Tom Barrett in announcing a plan to protect state taxpayers from a loss of approximately $419 million, if the NBA relocates the Milwaukee Bucks.  The total state contribution will be capped at $80 million.

“We’ve considered the financial impacts on the state should the Bucks stay or go, and quite simply, we found it’s cheaper to keep them,” Governor Walker said.  “Our plan is the result of a state and local, public and private alliance, and it is developed with the goal of ensuring a good return to our state taxpayers.  Under this plan, for every dollar the state invests, state taxpayers will get a $3 return on that investment.”

In April 2014, new owners bought the Milwaukee Bucks from Herb Kohl in a deal approved by the NBA and contingent upon the construction of a new arena by 2017.  If a new arena is not constructed by 2017, the NBA will buy the Bucks back from the current owners and move the team to another state. 

If the team is relocated, there will be a loss to state taxpayers of at least $419 million over the next 20 years due to the loss of current revenue, future growth, and the ongoing costs to maintain the Bradley Center.

Current and former team ownership committed to fund $250 million toward funding the $500 million arena project.  Under this plan, state and local governments will also fund $250 million, or half of the total project costs, toward building the new arena without tax increases or state bonding.  Any cost overruns would be paid by other sources, but not the state.

Working together with local leaders, Governor Walker, Speaker Vos, and Majority Leader Fitzgerald developed a plan that will cap the total state investment in the project at $80 million over 20 years.  Over a 20-year period, this plan protects $299 million in income tax revenue, including the base and projected growth.

Local governments will fund the remainder of the investment through infrastructure investment, direct funding, and financing through the Wisconsin Center District.

 

How it works:

  • For every dollar the state invests, state taxpayers will get a $3 return through income tax revenue.
  • State and local governments will fund $250 million, or half of the total project costs, toward building the new arena without tax increases or state bonding.
    • The state puts forward $4 million per year for 20 years, with the total state investment capped at $80 million.
    • The city will contribute $47 million through the creation of a TID and paying for a parking structure in upfront cash.
    • The county contributes $4 million per year over 20 years through a state debt collection agreement.
    • The Wisconsin Center District uses existing revenue streams to finance roughly $93 million in bonding for the plan.
  • Caps state contribution at $80 million toward the arena project.
  • Caps the total public contribution to the arena project at $250 million.
  • Claw back provisions included to protect both the state and local governments.  If the Bucks leave they will have to pay back the public investment.  The payback will be proportional to dollars contributed.
  • Any cost overruns would be paid by other sources, but not the state.
  • Maintenance and operations will be paid for by the team, not by the state or local governments.
  • The team and its partners will contribute 50 percent of the cost of the project with local funding coming in at 39 percent and the state contribution estimated at 11 percent of the total cost.

 

Benefits of the plan:

  • Protects state taxpayers from losses that would be at least $419 million over the next 20 years, including:
    • Base income tax revenue generated by the Milwaukee Bucks and from the visiting teams of $6.5 million per year in state income taxes, or $130 million over 20 years;
    • Income tax revenue growth estimated at $169 million over 20 years due to future contracts and estimated NBA pay increases;
    • Taxpayer liability for the Bradley Center estimated at $120 million in costs over the next ten years.
  • For every dollar the state invests, state taxpayers will get a $3 return through income tax revenue.
  • Supports a new arena without tax increases or state bonding.
  • Creates or preserves roughly 15,000 permanent and temporary construction jobs.
  • Protects state taxpayers by requiring the Bucks to reimburse the public investment should they leave the state.
  • The state will benefit from a $1 billion economic development project, which is estimated to create or preserve 15,000 permanent and temporary construction jobs.

 

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