Sin tax final score: Sports and money 56, frugal populists 44

For Clevelanders who follow politics, today’s the aftermath of a major conflict.

Nearly the entire political and business establishment lined up to support Issue 7, the alcohol and cigarettes tax for stadium renovations. A scrappy coalition of activists opposed it with a ferocity that had nothing to do with spending 7 1/2 more cents on a six-pack of beer.

The final score: Issue 7 passed, 56 percent to 44 percent. What’s that mean, beyond the price of a cigarette pack or a scoreboard? A lot. Here are a few keys to understanding the vote.

It’s a sports town. Someone recently wrote that losing the Browns in 1995 wounded Cleveland as badly as losing the Dodgers did Brooklyn. It’s true. For many Clevelanders, the sports teams make up a huge part of the city’s identity.

The major leagues drive hard bargains with cities. The public cost of owning Progressive Field, Quicken Loans Arena and FirstEnergy Stadium is going above $1 billion with this vote – to $1.2 billion from 1990 through 2035, Cleveland Magazine has calculated. Yet, we learned yesterday, a majority in Cuyahoga County is willing to pay it.

The frugal populists revolt. A lot of people in Cuyahoga County – about 44 percent of people, it turns out – think it’s unfair, outrageous, and illegitimate to spend tax money to build and renovate sports stadiums. Issue 7 gave a new generation a chance to join a rematch of the May 1990 vote on Gateway, which realigned local politics in ways that still resonate.

Many sin tax opponents weren’t just resisting the great expense of being a sports team’s landlord. They were frugal populists who treated Issue 7 as a vote on the entire Cleveland political system, especially the alliance of government and business.

The best way to understand most Cleveland political debates isn’t party politics. It’s, do you believe in spending tax money on “public-private partnerships” that draw people and business downtown? Or do you thinks that’s corporate welfare, giveaway of money better spent on other needs? That debate has run through our politics for decades, from tax abatement in the ’80s through Gateway in 1990 through the convention center debate in 2007, to the sin tax rematch yesterday. (For more on this great divide, check out my commentary after George Voinovich retired – the conflict traces back at least to his years as mayor.)

Populism declines in City Hall. Plenty of voters may have wanted to pressure the sports teams for a better deal, but almost no politicians did. Some were pragmatic, believing the city and county had little leverage to reopen lease negotiations midway through a binding contract. For instance, Mayor Frank Jackson voted against the stadium leases in the ’90s as a city council member, but felt bound to honor them as mayor.

Still, the near-unanimous support for Issue 7 among city and county officials reflects a political realignment. There aren’t many Dennis Kucinich-style leaders, ready to fight big business, in Cleveland politics anymore.

Money talks. Of course money affects elections. And the business-political alliance will always outspend the frugal populists. Issue 7 supporters spent more than $1 million, mostly from the teams, to get their message out. Polls suggest that helped sway undecided voters and turn the election around. Opponents had much less to spend.

What now? The debate about public stadium spending isn’t over. For one thing, the city and county have no agreement on how to split up the new sin tax money. I asked city council president Kevin Kelley about that on WCPN this morning, and he couldn’t say how it’ll be resolved.

The city and teams would like an even three-way split of the funds. But the county council isn’t inclined to do that. It may keep control of the sin tax funds and force the city to come to it, hat in hand, every time FirstEnergy Stadium needs repairs. Or, the city and county may negotiate a cooperative agreement on how to split the money, maybe with some new committee deciding how to set priorities.

I wouldn’t even be terribly surprised to see the Gateway board take over FirstEnergy Stadium. Gateway already has a system for comparing and prioritizing repairs at Progressive Field and Quicken Loans Arena. So why not bring the football stadium under that system, once the funding source is the same?

Whoever’s in charge of spending the stadium tax money will have an important job. They’ll have to manage the teams’ renovation requests so the costs don’t exceed the projected $260 million tax revenue. If the anti-sin tax crowd wants to stay engaged, it has plenty to watch and probe.

We don’t know how sin tax money will be spent

If the “sin tax” for stadiums passes May 6, who decides how much will go to the city of Cleveland, and how much to Gateway?

Who’ll decide what gets replaced first — the Quicken Loans Arena roof or the ramps at Progressive Field or the seats at FirstEnergy Stadium? Can any of it go to pay off construction debt, or will it all go to repairs and new scoreboards?

We don’t know. No one does. The city and Cuyahoga County still have to negotiate how they’ll share the alcohol and cigarette tax money. The negotiations won’t be easy. And they don’t intend to hash it out until after voters approve the tax.

“We do recognize that this is a gap in the legislation,” county councilman Dave Greenspan told me recently. “It is an issue we will need to deliberate on.”

The “sin tax” on alcohol and cigarettes is a county tax. So if voters extend it, the Cuyahoga County Council gets to decide how it’s spent. But city, county and business leaders say the extension is meant for repairs at all three publicly-owned sports facilities. (You can see the Indians' and Cavs' wish lists and a report about the Browns' stadium here.)

The city owns the football stadium, while the public Gateway corporation owns the baseball stadium and basketball arena. How will the money be divided?

“I think it will probably be even,” Mayor Frank Jackson said at the February press conference that kicked off the pro-sin tax campaign. Jackson wants the tax revenue, a projected $260 million over 20 years, to be split equally among baseball, football, and basketball.

But at a January meeting, Greenspan and three other Cuyahoga County council members warned Jackson’s chief of staff, Ken Silliman, not to expect an even split.

“A third, a third, a third is not something I am interested in,” Greenspan tells me. “I’m a big believer that the money follows the need. If in one year, Progressive Field has greater needs than the other two, that’s where money will go.”

The city and county haven’t had to share stadium money like this before. The first stadium sin tax, from 1990 to 2005, was earmarked for Gateway, to build Progressive Field and the Q. When the tax was renewed for 2005 to 2015, the first $116 million was earmarked for building and repairing FirstEnergy Stadium. (The last year or so of the tax will go to the county.)

But if the tax is extended to 2035, the city and county will have competing interests for the same pot of cash. The Jackson and FitzGerald administrations want to negotiate a cooperative agreement to figure out how to sort through those interests.

It’ll be tough. The Browns’ lease is more complex and vague about what the public has to pay for than the Indians’ and Cavs’ leases. The football stadium is newer and is used less often, but it’s bigger, and it’s battered by lakeshore winds. Gateway already has a system for weighing Progressive Field’s repair needs versus the Q’s. But that doesn’t help any with the football stadium -- unless Gateway were to take it over too.

The county will have the upper hand in negotiations with the city, because it levies the tax. But the cost of public stadium ownership is falling harder on the city right now. Cleveland is still paying off $13 million a year in construction debt on the football stadium, while the county is paying off $9 million a year in debt from the Q.

Could any sin tax money go to those old debts? City councilmen Brian Cummins and Mike Polensek have asked that question, and Jackson has entertained the possibility. But it seems unlikely. The county council sounds unwilling to hand over a straight third of the tax money to the city, and the county seems entirely focused on future repairs, not past debt.

Why wasn’t this all figured out before the tax went on the ballot? Greenspan asked that question at the January meeting.

“Those discussions need to happen, in my opinion, before the vote in May,” he said then, “so that the voters understand the complexity and understand the fundamental decision-making process as to how these funds are going to be used.”

He was ignored. Our elected officials would rather present a united front to get the tax passed, then argue about the messy details later.

Sin tax opponents propose $3.25 fee on all sports tickets; is pro-tax side getting scared?

The fight over the stadium sin tax just got more interesting.  After some uncertain steps, the opposition found its footing today. They proposed a simple alternative to the tax on alcohol and cigarettes -- a $3.25 facilities fee on every sports ticket.

"It takes the maintenance cost off the shoulders of those who can’t afford tickets or choose not to purchase them," says the No side's five-page, footnoted proposal, "and places it on those who actually use these venues, more than half of whom come from outside of Cuyahoga County."

At first, the opposition seemed like a pretty small group with a scattered message. But they are making headway.  The Yes side on Issue 7 has decided it can't ignore them anymore.  Are they getting scared?

The Keep Cleveland Strong campaign just sent out a press release saying a facility fee would "punish Cuyahoga County families and sports fans." It quotes three county council members and city council president Kevin Kelley. 

"These various ideas have been hatched and then publicly floated with apparently little thought, and none of them have stuck," says an especially disdainful county councilman Dan Brady. 

But this idea might stick -- at least as the counter-argument the town debates between now and May 6. 

Will Issue 7 be a jocks vs. nerds vote?  Fans surely don't want ticket prices to go higher. The Yes side notes it'll cost $13 more to take a family of four to a ball game. The average Clevelander may well prefer paying 7 cents on a six-pack of beer to that. Maybe the opposition has handed the sin tax side a winning argument.

But maybe not.  Warnings of higher ticket prices could rebound against the teams.  Our ticket prices may be low compared to other cities, but plenty of fans think they're gone up too much for frugal Cleveland.  Think of the anger against the Indians' dynamic pricing system, which raised the cost of cheap seats by much more than $3.25 in the last few years. 

Also, the No side cleverly notes that the Q already levels a $3 facility fee on concerts and all events other than games, and it doesn't seem to have hurt concert bookings.  

Last week, Brent Larkin wrote cryptically that the Yes side's latest poll "shows that the tax extension has a reasonably good chance of passing, although it’s far from a sure thing."  I think that means it's losing so far.  That could change, as the Yes campaign ramps up its message.  But it feels like the debate just realigned with 3 1/2 weeks to go.

Stadium boosters & critics debate sin tax at Sterle’s

Mark Rosentraub argues for the stadium sin tax at last night's Civic Commons debate.

Should voters support Cleveland’s stadium deals by voting for the stadium sin tax May 6? Or are we struggling under burdensome leases we can barely understand? Advocates on both sides argued the point last night during the Civic Commons debate as beer flowed at Sterle’s Country House.

Each side brought a numbers guy and a guy who argued from the gut. Mark Rosentraub, an economist who served on the Gateway stadium and arena board, made a case for the sin tax extension and the Cavaliers and Indians leases he helped renegotiate in 2004. City councilman Brian Cummins fired off figures to explain why he still has too many questions to support the tax.

Sounding simpler notes, Tom Yablonsky of the Historic Gateway Neighborhood organization argued that the stadiums have attracted residents and businesses downtown, while lawyer and sports blogger Peter Pattakos, with the newly launched no campaign, claimed the public should hold out in hopes of getting a better deal.

The debate format encouraged lots of back-and-forth, so several major questions about the sin tax were tested pretty thoroughly:


Do stadiums help downtown? Rosentraub, an expert on stadium financing, argued that sports don’t grow a region’s economy, but they do change the location of economic activity – meaning, they direct it to downtown Cleveland. He said 123,000 people commute from outside Cuyahoga County to jobs in Cleveland and pay $177 million in income taxes. The teams are part of “an amenity package that makes Cleveland a good place to work,” he argued.

Pattakos quoted Rosentraub’s writing, which calls sports’ spinoff effect on local business “quite small.” Yablonsky replied that downtown had only six residential addresses in 1990, before the baseball and basketball complex was built, and 62 now.


How else could we pay for this? Pattakos argued that stadium supporters should seek a seven-county tax, like in the Denver area, since plenty of Cleveland sports fans live outside Cuyahoga County. Yablonsky said state law doesn’t allow a multi-county tax. Cummins noted the state legislature changed the law to allow the sin tax extension. (Other Ohio counties can’t levy alcohol taxes.) Why not ask the legislature to allow a regional tax? he asked.

Cummins also suggested adding a $3 facility fee to tickets, on top of the 8 percent admissions tax fans pay now. “Could you raise the fees? Hypothetically, anything is possible,” replied Rosentraub. “Would the fans react negatively? Obviously.”


What are our obligations, even if the sin tax passes? Cummins said Cleveland still owes $128 million in debt from the football stadium’s construction, while Cuyahoga County still owes $88 million in Gateway construction debt. That costs Cleveland about $12 million a year and the county about $5 million a year. “The teams and the campaign have not told us anything about the sin tax paying down any of that debt,” Cummins said. The sin tax extension, expected to raise $260 million over 20 years, is meant mostly – maybe all – for repairs and upgrades.

Cleveland also pays $650,000 a year in property taxes at FirstEnergy Stadium, more than the Browns’ annual rent of $250,000. Meanwhile, the Gateway corporation itself has debts of $422 million, Cummins said, most of which “is probably never going to be paid.”

Yablonsky noted that Cleveland instituted several taxes in 1995 to help pay for the Browns’ stadium. “Those are right now dedicated to pay back the debt,” he said.

Cummins acknowledged that. He claimed the city raises: $27 million a year from those taxes, including a citywide parking tax and the sports and concerts admission tax.

“I actually talked to one of the CEO-presidents of one of the teams,” Cummins said. “He asked me, ‘Councilman, why aren’t you using your other taxes that you created to pay off the debt?’ I said, ‘We’d love to.” The problem, says Cummins, is that money is scarce. The state cut the local government fund and abolished the estate tax in the last few years. That cost Cleveland almost as much per year as the parking, admisssions and other taxes take in.


Can we get a better deal? Pattakos argued that a no vote on the sin tax would send elected officials and teams back to the negotiating table to change the leases. “If voters reject the sin tax this May, the teams aren’t going to leave this May,” he said. “They’re not going to leave anytime soon. We’ll end up with a better deal.”

Rosentraub said he already got the public a better deal in Gateway’s 2004 renegotiations with the Indians and Cavaliers. The deals, approved by the city and county governments, obligated the teams to pay for all maintenance that costs $500,000 or less – carpet, seats, etc. – if the public pays for major infrastructure, including roofs, heating and air conditioning. That, he says, saved the public about $3 million a year.

Yablonsky and Rosentraub cast a no vote on the sin tax as self-defeating, implying the teams don’t have much incentive to renegotiate.

“The reality is, if you don’t pass this, you still have to fulfill the terms of the lease,” Yablonsky argued. “So you put general fund money at risk if you don’t pass this. Effectively, you break the lease if you don’t come up with the terms to [make] the lease work.”

Roldo rises again to fight the stadium tax

Last week, Roldo Bartimole, the 80-year-old independent journalist, took a step most writers wouldn’t take – up to the speaker’s podium at a Cuyahoga County Council meeting.

An old debate has returned anew, and Roldo arose, as he did in the ’90s, to rail against the alcohol and cigarette tax that funds Cleveland’s stadiums.

“I think this is beyond reason, and I think any serious person would feel so,” he told the council in his high-pitched rasp. “Why would you want to place on the ballot another heavy tax burden, for who knows what real reasons these three team owners would use the money for?”

The council did not take his advice. This week it voted 11-0 to place a renewal of the “sin tax” on the May 6 ballot. A couple of hours later, I called Roldo and told him about the unanimous vote. He laughed. “Really unbelievable,” he said.

In my 14 years in town, I’ve never seen Roldo speak in public on an issue before. But his journalism has long had an activist bent. He recalls arguing with Mike White and Tim Hagan at press conferences and with Art Modell on the field of old Municipal Stadium. For 24 years, with more doggedness than the Browns chase quarterbacks, Roldo’s nipped at the ankles of Cleveland sports team owners, growling that the public shouldn’t build or own major-league stadiums.

The sin tax is "an unfair tax, a regressive tax, welfare for wealthy people,” he says. “All three owners are either billionaires, or members of families that are billionaires.”

I tried some pro-sin-tax arguments on him. The city and county own FirstEnergy Stadium, Progressive Field and Quicken Loans Arena. So shouldn’t the public pay for their upkeep?

“The point is, they should get themselves out of the business,” Roldo replied.

We’re the landlord. The teams are our tenants. If we break the leases, will the teams leave?

“The teams can leave, then,” Roldo answered. But he added, “I don’t think they’re going to go up and leave. They would take a lot of flak themselves for leaving a city. They’ve already done that with the football team. Would they do it again?

“No, I think Cleveland has an opportunity to start something that will go national: the teams start supporting themselves. They stop becoming welfare clients of a city that can’t even afford to educate their children.”

I read Roldo often, and I think he can spend too much energy fighting battles lost in the ’80s and ’90s. Public stadium funding and tax abatements for new business, the two biggest evils in his worldview, are common across the country now. Cities face tough compromises if they want to compete.

Yet a recent poll shows the stadium sin tax losing by almost 10 points. Greater Clevelanders are weary of the cost of public stadium ownership. Sports teams have gotten richer since the 1990s, Cleveland and Cuyahoga County have grown poorer, and everyone knows it.

So Roldo is relevant again. For him, the May 6 vote is a rematch, a sequel 24 years in the making. In his career-defining battle against the stadium and arena project in May 1990, Roldo printed “LET JACOBS PAY” buttons and bumper stickers to tweak then-Indians owner Dick Jacobs.

The Gateway project squeaked through with 52 percent of the countywide vote, but it has haunted local debates about public-private projects ever since. Last week, Roldo gave the county council copies of an infamous 1990 pro-Gateway ad, filled with grandiose, broken promises.

“I want to get the teams off welfare,” Roldo says. “A free stadium and not even pay property taxes? Does the museum come and say, give us $100 million over a long period, it’s hard to keep up?”