Tuesday, May 06, 2008


Over at Bleed Cubbie Blue, Al Yellon scored a meet-and-greet with Cubs' Transitional Interim President Crane Kenny.

Most of the interview is fluff. Then again, given that Kenny will be out of a job as soon as the sale of the team closes, asking him strategic questions about the Cubs future is not terribly relevant.

But there is some telling stuff relating to the sale of the ballpark. And it's stuff on which every taxpayer should be informed as it's a clear tax grab.

The scheme, and the word "scheme" is compeltely accurate, the Cubs want to use to rehab Wrigley is a play on tax increment financing (TIF). This one is called sales tax increment financing, or STIF. How appropriate. Let's go to Crane's words:

So what we would do is we would take what we call the transactional taxes that are paid here, sales taxes that are paid in the building on food, drink, merchandise, amusement taxes that are paid on ticket sales, use taxes, etc. Those taxes that are right now being paid inside the building for money being spent here, we would use a baseline year of 2007 and then all the incremental taxes that otherwise would have been paid into the general coffers above that baseline year would now go to support a bond issue which would renovate the stadium over 30 years.

(Sales taxes are the source of repayment. L)et’s just say today all of those taxes in total are $10 million that go to the City in ’07. The city, the county, the state. So it’s $10 million today. In ’08, let’s say because of ticket prices going up, concession prices going up, that percentage that you pay of amusement tax, etc., makes that number $11 million or $12 million. The $1 or $2 million difference between the base number and the increment, that's what would go to repay the bonds. So, it’s a way for the city, the state and the county to participate by saying pay us what you did last year for the next 30 years but all the incremental taxes that otherwise would come to us that are generated in the building stay in the building.

Do you see the scheme? It's the last sentance: "all the incremental taxes that otherwise would come to us that are generated in the building stay in the building." Were there no STIF, the taxes would be available for services to EVERYONE, not just bonds used to rehab Wrigley.

While no CURRENT taxes would go to the bonds, plenty of FUTURE taxes would go to the bonds. That's a tax grab, plain and simple.

So, a myth is busted by Crane's own words. Our taxes will be diverted to a private enterprise.

So, why should the taxes be diverted? Sometimes a case can be made for government subsidization of a private entity. What case does Crane make? A lousy one:

...almost all stadiums do have public support. As the White Sox, it’s 15 years old now, have had three major facelifts. We need a facelift. We think that one, the public can finance things at a cheaper level than the private sector.

So, Crane's case is that the White Sox got state cash and that the state does things cheaper thant the private sector.

His first reason gets a big, "So what?" The White Sox have nothing to do with the Cubs.

His second reason is one of cost. Yes, the government can finance things cheaper than the private sector. Again, so what? Doesn't Crane's case mean that every private enterprise should be eligible for public financing? For example, the next time Channel 7 needs new Sony HD cameras, should the state do it instead of having Disney issue their own bonds or commercial paper? The next time the Aon Building needs to have it's granite slabs replaced, should the state issue bonds and not Aon?

See where this is going?

Kenny's case was irrelevant. Of course the government can do it cheaper. The question really is WHY should it do it for the Cubs? What is the business case for government involvement? And, more importantly, what is the PUBLIC NTEREST in government involvement?

The answer to the second question is actually obvious. There is no public interest.

The Cubs do not deserve public financing and they do not deserve our tax dollars any more than any other middle market business does for rehab of their physical plant. This bad scheme really needs to go away.

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