Tax Policy

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How Cities Fell Out of Love With Sports Stadiums

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Major league teams used to get everything they wanted from sports-mad cities. Now they have to fight for it -- and increasingly, they’re losing.
BY  | MAY 2018
(AP)

St. Louis is used to getting stood up by football teams. The city has been home to four different franchises, and all of them have left town. But the last two departures -- and especially the loss of the Rams to Los Angeles in 2016 -- have been gut-wrenching experiences that seem to have broken much of the city’s storied enthusiasm for sports.

In 1987, St. Louis’ NFL team, the Cardinals, skipped town abruptly. Tired of the old Busch Memorial Stadium and increasingly indifferent fans, the team packed up after 27 years and headed for Arizona. The loss was a bitter one for St. Louis. But the city went after another NFL team with zeal. In the early 1990s, local officials had little trouble winning approval of a new downtown stadium funded entirely with taxpayer dollars. The city failed to win one of two NFL expansion teams awarded in 1993, but eventually it lured the Los Angeles Rams, who had their own problems with an ancient facility and a waning fan base. By 1995, the Rams were kicking off in downtown St. Louis.

It was a time when other cities were making similar choices. The Maryland Stadium Authority built a new publicly funded football stadium in 1998 as a prize for the NFL team it had stolen away from Cleveland two years earlier. Cleveland, in response, built a taxpayer-funded stadium and won back an NFL franchise in 1999.

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Taxpayers Have Their Own Bill of Rights in Colorado. But Who Benefits?

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The unique anti-tax tool has defined spending in the state, and it may spread to more states.
BY  | OCTOBER 2017
Anti-tax advocate Douglas Bruce led the TABOR effort in 1992. "No one has had the impact on Colorado politics" that he has, according to one academic in the state. (AP Photo/Ed Andrieski)

The blue tag on the streetlight outside Robert Loevy’s Colorado Springs home in 2010 didn’t signal an upcoming utility project. It was a receipt to show he had paid the $100 to keep his light on for the year. The city was facing a decimating $40 million budget gap and, among many other cuts, it was turning off one-third of its streetlights. That is, unless residents could come up with the money themselves. “I could afford to pay it,” Loevy says today, “but I have to think that would have been a stretch for many lower-income people.”

Loevy, a retired Colorado College professor, says the lights-out incident -- which earned Colorado Springs international infamy that year -- is just one of the many instances in which Colorado’s Taxpayer Bill of Rights (TABOR) has only benefited those taxpayers who can afford to pay for services out of their own pocket. Loevy has been a vocal critic of the law. As he sees it, “TABOR has had its worst effects on poor people.”

TABOR was approved by Colorado voters 25 years ago next month. The constitutional amendment limits the state’s year-to-year revenue growth to a formula based on inflation plus the growth in population. If revenues exceed TABOR limits, the money has to be rebated to voters, unless they approve an increase in spending.

Halfway across town, the author of TABOR holds a more cynical view of Colorado Springs’ recession-era cuts, which also included shuttering pools, terminating bus service on evenings and weekends and eliminating 550 municipal jobs. The deeply conservative Colorado Springs has its own TABOR that puts even more limitations on the city’s property tax rate. To Douglas Bruce, an anti-tax advocate who spearheaded the bill of rights effort in 1992 at the state level, the cuts were nothing more than a “publicity stunt” designed to fuel resentment against TABOR. “It confirmed my belief,” Bruce says, “that the people running city government are sadistic bastards.”

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Nation's Least-Funded Schools Get What They Pay For

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Education funding has yet to bounce back from the recession in many states. But nowhere is the situation more dire than in Oklahoma.
BY  | JUNE 2017
school hallway and lockers
Shutterstock.com

In his 17 years as a school official in Oklahoma, Robert Romines has dealt with more than his share of painful situations. In 2013, as superintendent in the town of Moore, he had to shepherd his system through the aftermath of a tornado that caused $2 billion in total damage, destroying entire neighborhoods and taking down two elementary schools. Today, he is up against a subtler but deeply corrosive attack on his schools: death by a thousand spending cuts.

No state has suffered more than Oklahoma when it comes to education funding over the past decade. As it has struggled to balance its budget in the face of declining oil revenue, spending on schools has declined further than anywhere else. Oklahoma now spends $1 billion less on K-12 education than it did a decade ago. One in five of its school districts has opted for a four-day school week; the base minimum salary for educators hasn’t been raised in nearly a decade; and emergency credentials are being awarded at a record pace to help fill teacher vacancies. Arts programs are going away. Some schools are consolidating their sports programs with other schools to save money. Funding was cut in this year’s education budget for the statewide science fair, in which students compete for awards and scholarships.

In Moore, Romines has tried to hold off as long as possible from making budget cuts that directly impact students. But in the last few years, he has had no choice.

A Sneak Peek at the Seismic Shift in Corporate Tax Breaks

New rules are forcing states and localities to calculate how much revenue they’re losing to business deals -- and whether they pay off. It’s something Washington state has been doing for a decade.
BY  | NOVEMBER 2016

Earlier this year, Washington state lawmakers got a wake-up call. A tax incentive package they’d approved in 2013 for aerospace giant Boeing -- largely regarded as the most expensive incentive deal in history -- was actually on pace to surpass its estimated $8.7 billion cost. According to a Department of Revenue report, the deal, which extends to 2040, had already amounted to half a billion dollars in giveaways in just the first two years alone. In other words, the state was losing out on a whole lot more money than it had planned.

And the kicker? Just months earlier, Boeing had announced plans to cut roughly 4,000 jobs in Washington. The year before, the company had transferred thousands more jobs out of the state.

Some lawmakers were livid, openly contemplating whether the state should consider revoking the tax breaks if the company didn’t add back some jobs. (Boeing, for its part, says it has continued to invest in the state, including $1 billion last year for a plant to build its new 777x aircraft.) But on the whole, response from officials and local media was measured. Most lawmakers said that in the bigger picture, the company was still good for Washington.

Big-Box Stores Battle Local Governments Over Property Taxes

The retailers are deploying a ‘dark store’ strategy that’s hurting cities and counties around the country

BY  | SEPTEMBER 2016

On Michigan’s sparsely populated Upper Peninsula, big-box stores are a modern necessity. Where towns are spaced far apart and winters are long, one-stop shopping to load up on supplies adds a crucial convenience to what can be -- at least for many -- a rugged existence.

Landing one large retailer is a coup. Having more than one can make a city or town a regional shopping destination. Marquette Township, a small community adjacent to the larger city of Marquette, is in the unique position of having a handful of big-box chain stores. Taking advantage of the fact that the city of Marquette was mostly built out, the township began encouraging large-scale commercial development on its western edge early in the 2000s.

The China Factor in America's State and Local Economies

As the world's second-largest economy falters, pensions and tax revenues here are feeling the pinch.

BY  | AUGUST 2016

Earlier this summer, New York state’s pension fund announced a mediocre year. Investment earnings were essentially flat, and as a result the fund lost $5 billion because its other receipts -- contributions from government and from current employees -- didn’t cover retiree payouts.

The New York pension system was the victim of a global event that began halfway across the world a year ago this month. In August 2015, the world’s second-largest economy officially began to stumble. China’s central bank stunned investors by devaluing the yuan, lending credence to what outsiders had long been suspecting: China’s years of astounding annual economic growth -- at times cresting at double digits -- was slowing down.

The Curious Case of Disappearing Corporate Taxes

Over the past two decades, corporations have doubled their profits but contributed increasingly less to state revenues. Where is all the money going?
BY  | JANUARY 2016

When Rick Snyder became governor of Michigan in 2011, his state had been on a 10-year economic slide -- businesses were leaving and so were people. Where the rest of the country saw growth in the first two-thirds of the 2000s, Michigan’s fiscal health was slip-sliding away.

Reversing a slide is difficult, and Michigan’s governor and legislators focused a good chunk of their turnaround efforts on taxes. They wanted to reform the tax code so that it would lure businesses and generate the revenue needed to underwrite the kind of quality services that make people want to live there. Snyder’s first step was to ask the legislature to slash business taxes. Within months, lawmakers repealed the unpopular and complicated Michigan Business Tax -- though businesses could opt to stay with parts of the old system and its arcane web of credits and rebates. That isn’t all the legislation did. The new tax law created a flat 6 percent tax that only certain types of corporations paid on their income. Talk about simplification: Nearly 100,000 businesses no longer had to file corporate returns.

Michigan has made economic progress since the 2011 tax reforms were passed. The population has stabilized, and the state ranks fifth in the country in job creation. Earlier this year, Michigan’s bond rating was upgraded, an affirmation of a more stable fiscal environment.