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- Stadium Subsidies Still Popular Despite Budget Crunches
Stadium Subsidies Still Popular Despite Budget Crunches
Andrew Moylan of the National Taxpayers Union writes in Budget & Tax News about stadium subsidies:
According to Neil deMause, author of Field of Schemes, an exposé on stadium subsidies, New York City taxpayers paid a whopping $1.8 billion in subsidies for construction of the stadiums, despite the franchises being worth more than $2.1 billion collectively. The teams pitched in just over $800 million.
Soon after New York officials dispensed those enormous subsidies, the bottom dropped out of the city's balance sheet. In May of this year, Mayor Michael Bloomberg (R) unveiled a budget loaded with tax hikes to close a gap threatening to approach $5 billion in 2011. He called for a hike in the city's already-high sales tax, plus a 5 cent fee for every plastic grocery bag used in the city.
Meanwhile, as California's state budget situation began crumbling into a looming $21.3 billion deficit, the city of Santa Clara recently inked a deal promising more than $150 million in taxpayer money to help build a stadium for the National Football League's San Francisco 49ers, a franchise worth nearly $800 million.
It can be quite a sum, and we of course described how New York City and federal taxpayers footed the bill in a hidden way for the Yankees' new stadium:
First, the new Yankee Stadium will be city-owned and thus exempt from property taxes. Meanwhile its primary tenant, the Yankees, will pay no rent. This clearly brings up the issue of whether such tax-exempt bonds should have been issued at all, and especially when the city is so far in the red.
Secondly, to pay off the bonds over time, New York City will receive payments theoretically equivalent to the property taxes that Yankee Stadium would otherwise pay. The city claims that these payments in lieu of taxes (PILOTs) equal taxes that would otherwise be owed. In reality, these payments are inflated by overvaluing the stadium property by three times that of comparable property. By inflating the payments in lieu of taxes, the City can say to taxpayers that the Yankees are paying a significant part of the stadium's cost, while telling the IRS that the City is paying for almost all of it.
Read the rest here.
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