Politics

Obama's New Budget Means Federal Tax Payers Won't Fund Sports Stadiums

| by Amanda Andrade-Rhoades
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Obama’s new budget aims to do a lot of things, like expand the defense budget and give middle-class families tax breaks. 

It will also ensure your federal tax dollars won’t pay for sports stadiums. 

Think Progress reported the new budget will repeal tax exemptions from the bonds that finance sports facilities, if more than 10% of the facility is used by private businesses. Almost all professional sports arenas would fall under that category, meaning it falls to cities and states to finance stadiums with bonds that aren’t tax-exempt.

"Perfect. You couldn’t do it any better if you believe like I do that we should not finance these things with tax-exempt debt,” said Dennis Zimmerman, a retired economist who worked for the Congressional Research Service and Congressional Budget Office. Zimmerman is now the director of projects for the American Tax Policy Institute. He proposed eliminating the tax exemption on government bonds for sports facilities in 1996.

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“Cities can still pay for stadiums,” Zimmerman said. “But there would be no federal subsidy paying part of the interest cost. That’s what’s at stake here: it’s will the federal government pay a share of the interest costs?”

Between 1986 and 2012, sports facilities accounted for $17 billion in tax-exempt bond debt. That debt will be paid off 30 years from now and, by that time, the exemption will cost federal tax payers $4 billion under Obama's plan.

The federal savings would be about $542 million between 2016 and 2025, however federal tax payers will no longer be responsible for subsidizing stadiums far from their home team.

“It raises the opportunity cost to local governments,” Zimmerman said. “That’s [more money] devoted to a stadium instead of to all of the other public services they could be providing. It might make people think a little more.”

“Every dollar now, a bigger share of that is going to stadiums, and isn’t available for highways, or prisons, or schools, or facilities for seniors, or whatever they’re doing with their budget,” he said.

Source: Think Progress Image via Bspangenberg/Wikimedia Commons