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We are not impressed by Washington’s budget making. The latest deal between Congress and the administration increases the budget deficit. The president’s proposed 2017 budget projects even more red ink.
Obama’s 2017 budget does have one provision that makes us want to send him a belated Valentine! He asks Congress to eliminate a federal tax exemption for interest payments on local bonds issued to build professional sports venues.
This won’t save much money, only $542 million over a decade—coins under the sofa cushions compared to the $40 trillion-plus in planned spending. But it makes a philosophical point about the proper sphere of government.
Owners, players and fans obtain the benefits of professional sports. Fans pay for tickets and licensed merchandise, while media networks pay for broadcast rights. Owners collect this revenue and use it to pay player salaries, market the franchise and return a profit on their investment. This is all well and good until we recognize that the teams do not typically pay for the facilities where they play. These are usually owned by a municipal entity that is taxpayer-financed. All citizens, sports fans or not, pony up to pay for these.
This is a questionable state of affairs. Asking some citizens to subsidize other citizens’ entertainment is plunder. Don’t misunderstand: We love football, baseball and basketball. We also love skeet shooting, bowling and—in our younger days—go-cart driving. Yet shooting ranges, bowling alleys and go-cart tracks seem to get along fine without taxpayers picking up their facility costs. Why should pro sports be so privileged?
Of course, we know the answer. Owners know they can get away with it. Being in the major leagues has political appeal. No sane politician wants to be tagged as the one who lost the Pacers, Colts or Indians on their watch. Franchise owners know this and can extort all kinds of concessions under the threat to move.
Federal tax exemption of interest for municipal bonds used to finance sports facilities puts the whole process on steroids. Eliminating the break will not end the practice but might slow it down a bit. If the city-owner cabal that runs the stadium has to pay 5 percent on its borrowing compared to 3 percent, it might be a bit more frugal and careful in building construction and franchise operation. And at least taxpayers in rural Nebraska will not be indirectly bearing the costs of a mega-stadium in Detroit!•
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Bohannon is a professor of economics at Ball State University. Styring is an economist and independent researcher. Both also blog at INforefront.com. Send comments to ibjedit@ibj.com.
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