I wrote recently that in the lead up to the public vote, even earnings tax defenders could not defend the earnings tax. Despite urging yes votes, they conceded many, if not all, of my claims that the tax makes for bad policy.
Now we might be seeing this story repeat itself with stadium subsidies. It’s being reported that Kansas City’s package of subsidies for a downtown baseball stadium includes bonds issued by the city—and backed by them. This means that if the stadium fails to generate enough revenue to pay the bonds, city taxpayers will make up the difference. This is exactly the type of deal that requires the city to direct over $10 million each year to cover Power & Light District debts.
The Kansas City Business Journal reports city leaders are aware of that same risk with a downtown ballpark for the Royals. They concede:
. . . estimates for Power & Light District sales and economic activity tax generation proved “spectacularly wrong.” The entertainment hub’s annual bond gaps have required about $10.5 million a year from the city’s general fund and $199 million total to date.
City leaders now say they’re being more careful — even as they plan to support as much as two times the district’s original debt for a stadium at Washington Square Park.
How times have changed. Twenty years ago then-Mayor Kay Barnes told a columnist for The Kansas City Star, regarding her deal on the Power & Light District:
“We’re going to look like geniuses” in five or 10 years, Barnes said. The city is paying low interest rates for projects that are capable of paying off the debt, she added.
Barnes could not have been more wrong. (Though she was named the 2018 Kansas Citian of the Year by the Chamber of Commerce, which says more about the chamber than it does Barnes.)
Public subsidies for private interests such as a baseball stadium is still bad policy. They don’t benefit taxpayers. But it’s some comfort that at least Kansas City leaders are capable of learning from their mistakes—right?
Right?
