D.C. business leaders are angry that millions of dollars in taxes they are paying to reduce the gargantuan Nationals Park debt may be diverted to pay down the District’s massive deficit.
Mayor Adrian Fenty’s revised 2010 budget plan shifts $50 million from the Ballpark Revenue Fund to the general fund over the next four years. There it would be used to help bridge shortfalls totaling more than $1 billion through 2013.
The move has incensed medium- and large-business owners, who are charged an annual gross receipts tax to augment the ballpark fund — a pot specifically created to pay off $535 million in stadium bonds.
“This does convert a specific fee created to retire the debt of the baseball stadium into a general business tax,” said Gary Curtis, president and chief executive officer of Hager Sharpe. “It is an inappropriate use of money, of this revenue stream, that was pledged to a specific purpose.”
Even worse, Curtis said, is that the District seems determined to collect the fee even as the economy falters and businesses’ gross receipts collapse.
The ballpark fund comprises stadium-related sales taxes, a portion of Districtwide utility taxes, the Nationals’ annual lease payment and the gross receipts tax, ranging from $5,500 to $16,500 annually, on about 1,300 businesses that earn more than $5 million a year. The tax generated nearly $25 million in fiscal 2008.
The District, during former Mayor Anthony Williams’ administration, pledged that fund surpluses would be used to pay off the stadium debt early, said Barbara Lang, president of the D.C. Chamber of Commerce. Now, she said, the Fenty administration is reneging just as the tax threatens to “break the back” of some companies.
The chamber will fight the proposed diversion ahead of the D.C. Council’s July 31 vote on the budget plan, Lang said. At the very least, she said, there should be budget language stopping the transfer after 2013.
Paying off debt early is the “right thing to do,” said Ed Lazere, executive director of the D.C. Fiscal Policy Institute and an advocate for dipping into the ballpark fund. But “our revenues have fallen by $1.5 billion,” he said, “and we are scrambling to do the best we can to preserve services without having to raise taxes.”
Ward 2 Councilman Jack Evans disagreed. Diverting the ballpark fund is a “bad idea,” he said, because it is a “one-time fix” when the city needs steep budget cuts and because Wall Street bond rating agencies are “comforted” by surpluses.
The stadium bonds
» Original bond issue: $534.8 million
» Principal paid so far: $13.05 million
» Estimated payoff: 2036
