Bringing sanity to stadium building

Sports fans are driven by numbers, digits that convey achievement, emotion, memory.

Just mention 714, 8/18, or the quintet of 1940, 1953, 1976, 1981 and 1987, and many will light up recalling Hank Aaron’s home-run record, Reggie Miller’s scoring blitz against the Knicks or IU’s basketball titles.

Here’s another number Indianapolis fans may not recall, but perhaps should — $43 million.

No, that is not the size of Andrew Luck’s new contract, but it is related to football.

Instead, in this era where new stadium construction has become the NFL’s version of a nuclear arms race, $43 million is the amount that taxpayers still owe on the RCA Dome.

Yep, that’s right, the long-since-imploded first home of the Colts still has a sizable bill attached to it; indeed, it won’t be paid off until 2021.

Think about each time you buy a meal or a cup of coffee and pay that stadium tax added onto your tab. We’re not just paying $716 million for Lucas Oil Stadium, we’re paying for its predecessor, as well.

I don’t raise this point to rankle your nerves, although you are free to rankle away.

No, the point here is to hold out hope that runaway stadium spending, which is underwritten heavily by local taxpayers, can be slapped with some greater accountability and fiscal responsibility in the future.

Stadium projects created for largely private purposes and underwritten with tax-exempt bonds have benefited too greatly for too long.

No matter how rationalized, this is corporate welfare at its most obscene. The owners of pro sports franchises have successfully leveraged civic fear of losing a beloved team into a not-so-subtle way to wrest public dollars away from other civic priorities that (gasp!) might be more meaningful than a sporting team.

Look no further than the $43 million we still are anteing up for an RCA Dome that has been gone for seven years. That would pay for a lot of road construction or pre-K schooling. (To be fair, the RCA Dome bonds have been refinanced several times but remain on the books.)

This is not an Indianapolis issue; it is an everywhere issue.

Officials in Milwaukee and St. Louis now are grappling with how to pay for new NBA and NFL stadiums, respectively, in their towns. In another decade, Indy will be back in line for a new football stadium. It is a vicious cycle.

That is why a small provision in President Barack Obama’s budget should be cheered by those supporting a modicum of fiscal responsibility.

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.

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. In short, stadiums used for pro sports would not get this tax break that is intended for public works projects.

That matters to you and me as taxpayers.

“The current structuring of the governmental bonds to finance sports facilities has shifted more of the costs and risks from the private owners to local residents and taxpayers in general,” the Treasury Department said in a summary of the proposal.

In fact, elimination of this loophole could produce $542 million in tax revenue over the next decade.

That possibility is putting some politicians in tough positions. In Milwaukee, fiscally conservative Wisconsin Gov. Scott Walker has backed the use of tax-exempt financing for a new $220 NBA stadium.

That stance is drawing fire from both sides of the political spectrum. The reality, though, is that political leaders fear losing high-profile teams.

Obama’s budget proposal won’t change that.

It will, however, put a dose of fiscal reality in the process. Sports stadiums built for primarily private benefit — like Lucas Oil Stadium and virtually every other stadium built in the past two decades — should not be able to avoid taxes by financing subterfuge.

Cities still could build stadiums, but there would be no federal subsidy of the interest cost. In other words, the result would be less corporate welfare and more governmental transparency.

Since it would apply to virtually all future pro stadium projects, the change would not disadvantage one locale versus another. It would instill a small dose of fiscal reality to all.

In a pro sports world of million dollar salaries and billion dollar stadiums, a little sanity would be a good thing.

Bob Johnson is a sports correspondent for the Daily Journal.