Tuesday, January 22, 2013

Washington May Make Stadiums More Expensive

Although it didn't mention stadiums, today's lead story in the Tampa Tribune may be bad news for the Rays' push for a new stadium.

The headline read, "Tampa may face increased loan costs; Momentum is building in Washington to scrap tax exemption on municipal bonds":
Between its daily operations and self-supporting utilities, Tampa's debt payment this year will be $87.1 million, or nearly 11 percent of its total budget. That figure could rise if Congress closes a loophole that keeps local authorities' debt costs down by making interest payments to investors exempt from federal income tax.

The proposal has been floating around Washington for nearly a year, part of a laundry list of possible services to cut or loopholes to close in the effort to balance the federal budget without raising taxes.
Tax-exempt bonds are also how most stadiums are paid for, and they were one of the big reasons the region's Baseball Stadium Financing Caucus suggested municipalities pull out new stadium bonds instead of the Rays.

While it's not clear if the tax exemption will come up in upcoming debt negotiations, the Trib suggested its $146 billion value would make it fair game.  So not only will cities and counties be actively watching the debt discussions for their effects on local budgets, but stadium proponents will be crossing their fingers, hoping the tax-exempt bond issue remains off the picture.

UPDATE: Field of Schemes author Neil deMaus points out "stadiums were supposed to be exempted (from the loophole) by the 1986 Tax Reform Act, but sports teams found a way around it. A bunch of ways, actually."

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