City officials must feel they are trapped in some recurring nightmare. No matter how they try, they keep bumping up against the decision to use Charlotte taxpayer money to build a new uptown basketball arena. In this holiday season, the decision is truly the gift that keeps on giving.
The latest bump comes in the form of the expected recommendation to levy $8 million a year in new taxes to help pay for a $190 million arts program wish list. Specifically, hikes in the city’s rental car tax and a 25-cent surcharge on center city parking are the most likely options, although a surcharge on tickets to cultural events may also get a close look.
Such a tax hike would put Charlotte in plenty of company with other cities that attempted to build new sports arenas only to find that the rosy financial assumptions used to sell the projects to the public set off shockwaves in municipal budgets for years to come. There is also an element of bait-and-switch involved as cities repeatedly try to sell the new taxes as “arts taxes” rather than “sports taxes.” In fact, some consultant somewhere must have a PowerPoint presentation for local leaders that reads “art tax = good,” “sports tax = bad.” But make no mistake, the root cause of the revenue need is the millions spent on stadiums, ballparks, and arenas.
The case of Pittsburgh’s search for more money in the wake of its building spree is particularly illustrative of the awful treadmill cities across America are on. Pittsburgh levies a wage tax on visiting professional athletes to help pay for the public bonds that built new football and baseball stadiums. But arts groups in the city want the pro player tax to be $1.6 million higher in order to offset the $1.4 million in city “amusement tax” fees they pay. Notice how no one suggests ending both taxes and ending the absurd money shuttling. The stadium bonds must, by law, be paid so more revenue must be found to pay for things seemingly unrelated to sports.
In Charlotte the issue is the hotel-motel tax revenue that would normally be available to fund arts projects is instead being eaten up serving the debt for the new NBA arena. Very early on in the effort to bring in a new NBA team to replace the Hornets the city pledged $80 million in future hotel-motel revenue to the cause. Of course, no mention of future tax hikes to replace those funds was made clear, at least not to skeptical public that voted down a new arena plan by whopping 14-point margin in 2001.
Of course just focusing on the direct revenue implications fails to capture the entire public subsidy which flows to pro sports franchises that get publicly-financed courts and fields. By converting what is obviously a private, for-profit, entertainment enterprise into a public project, tax-free financing can be secured. This tax-free status also deprives government of revenue, adding to the treadmill effect.
More interesting still is the fact that arts and cultural facilities seem to come much closer to meeting a true public goods test, yet the big money flows to the stadiums. Non-profit, community arts efforts with an educational mission, for example, would seem to have more of claim to some public funding than sports leagues with worldwide profits in the billions of dollars.
That, of course, is precisely why Charlotte residents will soon be hit up for more money. Remember, arts tax = good, sports tax = bad.