A hot local debate is about whether or not a basketball and hockey arena is a worthwhile project, and if the proposed site is the correct one. (My take: the public contribution here is below the going rate, and I’d like to see the NBA here; Sodo is the right neighborhood, but there are much better sites within Sodo). What there isn’t any disagreement about is that the proposed deal is a public subsidy to prospective basketball and hockey franchises.
The structure of the deal, on which see Goldy’s exceptional two-part series, is this. There is no diversion of funds from the current budget per se. Instead, most of the taxes levied on arena activity are dedicated to paying off bonds on that arena. The deal involves the credit of municipal government and there are numerous second-order effects, but in the broadest sense the government’s fiscal position should remain unchanged.
Whether or not you think this is a good deal, this arrangement should sound familiar. Although the structure of the taxes is somewhat different, this strongly resembles the arrangement the state’s motorists enjoy. Rather than levy sales tax on gasoline like on almost any other good, the state levies a separate, roughly equivalent tax that is dedicated to highway purposes. And yet people are arguing with my contention that this is a sweetheart deal for drivers.
All of our transportation modes are subsidized, and it’s not crazy to think that driving should be as well. It’s also entirely coherent to favor a benefit for the wide base of drivers but not the National Basketball Association. However, there’s no free market transportation mode that’s getting unfairly dinged by mass transit subsidies.