October 8, 2014
by James Wigderson
Special Guest Perspective for the MacIver Institute
It’s bad enough that some business leaders and Milwaukee elected officials want the surrounding counties to pay for a new arena for the Milwaukee Bucks. But now they’re talking about taxing our beer, and those are fighting words.
The Milwaukee Bucks and their new billionaire ownership have a deadline of October 1, 2017 for a new arena. If they don’t get a new arena, the NBA can buy back the franchise and move the team to another city.
Even before the deadline was set, talk of a new arena prompted a discussion of the other cultural needs in Milwaukee County. A study by Public Policy Forum compiled a wish list for some of Milwaukee County’s cultural attractions, including the Milwaukee County Zoo and Museum. A cultural needs task force was created to figure out how to pay for the wish list and a possible public share of a new arena to replace the Bradley Center.
Last week we learned some of the price tags for all of this wishing. As expected, the public portion of a new arena would be $200 million or $15 million annually over 20 years. That assumes a 4.25% borrowing rate and level payments.
The task force estimates the cost of taking care of deferred maintenance projects for the cultural attractions is $105 million or $7.9 million annually over the 20 years. Capital improvements will cost $140 million or $11 million annually. That brings the total to $445 million or $33.9 million annually.
The task force members added a few more potential items to the wish list. Taking over the funding of the operations of the Milwaukee County Zoo, the Milwaukee Public Museum, the Milwaukee Art Museum and the Performing Arts Center would cost $11 million annually or $230 million over 20 years. Other “potential uses” of money they haven’t even collected yet include Milwaukee County’s buses ($18.2 million annually), Milwaukee County Parks ($25 million annually), and even the Wisconsin Center District ($15 million).
If the task force puts more time and effort into it, maybe they can also fund the Milwaukee County Board salaries as a cultural attraction.
Of course, all of these things cost money, and the task force wants money from the surrounding WOW counties (Washington, Ozaukee and Waukesha) to pay for them. That’s why they’re even considering creating a $5 million “discretionary” fund for the surrounding counties to use as they wish. However, even the dullest suburban politician can figure out that $5 million is a poor return on the amount their taxpayers would be giving to Milwaukee County.
Which brings us back to the price of beer. To reduce the amount of direct taxation of the residents of the four counties, the task force is considering recommending increasing the tax on the beer we drink. They even helpfully add that the total tax on beer in Cuyahoga County, the Cleveland area, is $10.54 per barrel. The tax on beer in Wisconsin is $2 per barrel.
As Sigmund Snopek proudly sang, “Thank God this isn’t Cleveland.”
Raising the beer tax by $3 per barrel will raise $3.8 million annually. That won’t even cover the amount of money they want to stick in the “discretionary” fund to get the WOW counties to go along with contributing to building the new arena.
Worse, a beer tax is a very regressive tax. According to a study by The Beer Institute, “households earning less than $50,000 per year pay half of all beer taxes.”
They add, “Beer taxes are actually 6.5 times higher as a percent of income for lower-income households (those earning less than $20,000 per year) compared to higher-income households (earning $70,000+ per year).”
Given the inadequacy and regressive nature of the beer tax increase, perhaps the task force should leave that suggestion alone so we can wash down some of the other tax increase suggestions.
A $5 per ticket tax at the Milwaukee Art Museum, the Milwaukee Public Museum, the Milwaukee County Zoo, the BMO Harris Bradley Center and the Marcus Center will raise $12 million annually. At least it would be a user fee, although it still falls well short of their wanted expenditures.
The task force suggests a TIF district should be considered, although it does not give any actual figures for revenue generated. The report also does indicate whether a proposal would be made to include diverting state tax revenue, too, something that Assembly Speaker Robin Vos has suggested would be difficult to get through the state legislature.
The report also mentions raising the tax on liquor (up to $11.1 million annually) and cigarettes ($19.3 million annually). Smokers might just move to Cuyahoga County if they read the report and discover the per pack state and local taxes are actually lower there. But both taxes raise the obvious question, why should the residents in the neighboring counties pay more for their vices just because Milwaukee County wants them to?
Which brings us to the worst suggestion from the task force: raising the sales tax on Milwaukee, Ozaukee, Waukesha and Washington counties. A suggested .1% additional sales tax on the neighboring counties would take $11 million out of the private economy. Milwaukee County residents should know that the task force even is considering recommending a .3% additional sales tax, on top of the increasing taxes they already pay, to take an additional $37.4 million in tax revenue to fund the task force wish list.
That’s enough to drive us all to drink, especially if they attempt to make us pay more for the privilege.