Wednesday, April 23, 2014

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.


Anonymous said...

You'd better watch your rhetoric, Mr. Liberal Writer. Your bias against this sin tax is coming through LOUD AND CLEAR. It's funny how you will pick apart a tax issue, but you never seem to have the guts to go after any of these politicians. One puff piece after another.

Anonymous said...

What are you talking about Anonymous? How is asking questions about how money is being spent a liberal issue? It's a good taxpayer question. I want the writer to ask CLE elected how they think money should be spent.

Anonymous said...

There are people on both the right and left opposing this tax. The Tea Party of Ohio opposes it, for instance. Wanting accountable good governance is not a partisan issue.

(PS -- Rumor has it that as of week end KCS internal polling shows the NO campaign ahead by a couple of points. Vote NO on 7!)