[caption id=”attachment_144379″ align=”aligncenter” width=”1024″] Republican Assembly Speaker Robin Vos, right, motions to Democratic Reps., from left: Peter Barca; JoCasta Zamarripa and Christine Sinicki at a news conference to announce a bill to pay for a new $500 million Milwaukee Bucks arena will pass on Tuesday, July 28, 2015, in Madison, Wis. (AP Photo/Scott Bauer)
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The Milwaukee Bucks are set to gain a new basketball arena, thanks to the tax dollars of Wisconsinites — and Scott Walker.
On Wednesday, Governor Walker will sign a law granting $400 million in state funds towards the arena, according to Bloomberg. The bill was passed with bipartisan support in the Wisconsin state legislature.
It doesn’t help Walker’s image that the Bucks’ co-owners have donated $200,000 to a super political action committee that supports his presidential campaign.
Groups that have supported some of Walker’s past efforts, such as Americans for Prosperity and the Wisconsin-based MacIver Institute, have been critical of the arena subsidy.
In his defense, Walker claimed it was necessary to keep the Bucks from leaving Milwaukee, which would have lost the state almost $300 million in tax revenue.
Spending money to make money, however, doesn’t have empirical evidence to support it.
According to a 2001 study from the Federal Reserve Bank of St. Louis, “between 1987 and 1999, 55 stadiums and arenas were refurbished or built in the United States at a cost of more than $8.7 billion.” That figure doesn’t include indirect costs to cities, and $5 billion came from taxpayer subsidies. If the rate of return on tax dollars was positive, an economic argument could be made for the subsidies.
However, research doesn’t show any economic returns.
Taxpayer-financed stadiums and arenas remain a common and popular policy. Even when the public criticizes a proposal for a new stadium, it tends to succeed. The root problem is that the plan greatly benefits a few people while making a lot of people pay a little. When there are dispersed costs and concentrated benefits, bad policy become law.
On a city and state level, it’s clear that the economic returns don’t materialize. The political will to stop it, though, doesn’t exist. Assuming the stadium will cost $400 million, the cost to each of the 5.8 million Wisconsinites will be $69 if the full cost were to hit in one year. The costs will be spread over 20 years, actually, so it’s more like a $3.47 surcharge on a tax return for the next 20 years.
The direct beneficiaries of the stadium are a much smaller group. Lobbying the legislature and executive to support the subsidies results in a large benefit.
Protests don’t form at the Wisconsin statehouse over a $69 tax increase.
Regardless of the economic wisdom, the political reality is repeated on a national scale and sports stadiums continue to win the battle.
This deal isn’t likely to hurt Walker’s campaign, but it’s an illuminating example of how Republicans might sing the praises of the free market in theory, but don’t hesitate to grant public subsidies to private companies in practice.
