How Abele Bailed Out Walker
Governor made fatal error on Bucks arena, but Abele volunteered county taxpayers to solve the problem.
It was back in late January that Gov. Scott Walker, already getting diverted from state issues by his aggressive run for president, announced the state would issue $220 million in bonds to pay for a new Bucks arena. Walker had just won election as governor for the third time in four years, had repeatedly shown great deftness in framing issues to his advantage and doubtless had supreme confidence in his ability to sell voters on this issue.
As Walker explained it, the deal involved “no new taxes” and “absolute security for the taxpayers” because the $220 million in bonds would be recouped through new state income taxes paid by Bucks ballplayers, whose average salary would rise significantly in future years due to a lucrative new TV contract signed by the NBA.
Walker was so confident of his sales pitch that he barely asked for any contribution from Milwaukee; the most the city and county would be expected to provide was $50 million between them. Mayor Tom Barrett, who had already announced that the city could not use the property tax levy to fund the arena, immediately embraced the proposal. “We thought it was a good plan,” says Barrett’s chief of staff Patrick Curley. “The proportionality was attractive.”
Indeed it was. As it became clear the total cost of the bonds, with interest, would amount to $380 million, the numbers showed the state would be paying 88 percent of the total public costs for a Milwaukee-based facility that would benefit three Bucks owners whose combined net worth exceeded $5 billion and the Bucks ballplayers whose average salary was nearly $4 million. Imagine trying to sell that to your constituents if you’re the average Republican legislator, almost all with districts outside the city of Milwaukee, a place that many GOP legislators routinely demonize. Polls showed citizens outside the Democratic redoubts of Milwaukee and Madison opposed giving state help for an arena by an astounding 86 percent to 10 percent, as Steven Walters has reported.
The situation was rife with irony. Here was Walker’s bitterest opponent, Barrett, beaten twice in gubernatorial races, heaping praise on the governor’s plan, and watching the Republicans squirm over the political hot potato Walker had handed them. The Republicans had lost the State Senate in the 1990s because they supported the Miller Park subsidy, as George Petak was recalled from office, and now they faced a problem that might be just as perilous.
But it turns out they had an ace in the hole: Milwaukee County Executive Chris Abele. Abele told the Journal Sentinel he was working “on an alternative plan for the city-county contribution that can bring more value to the project.”
Precisely what he worked out is unclear. Abele was the first to mention tapping into the Wisconsin Center District car rental and hotel tax. Abele and city officials, I’m told, agreed on a plan proposing to increase the Wisconsin Center’s tax in order to help pay for the arena and pay for expanding the city’s convention center. But Walker and Vos soon shot that idea down: they wanted no tax increase and didn’t want an expanded convention center as part of the deal. But they soon proposed to use the Wisconsin Center to issue bonds that could be repaid with taxes generated after 2028 (when the center’s tax will begin to generate revenue beyond the construction costs it is currently repaying). This plan pushes the costs of the arena far into the future, on the backs of local taxpayers (and tourists, who pay a significant percentage of the hotel and car rental taxes). Abele and Barrett both agreed to this plan, which, with interest included, will cost $200 million.
But this still wasn’t enough money. By the time this discussion was going on, Vos had made it clear the state wouldn’t contribute more than $55 million (plus an estimated $25 million in interest payments), a reduction of $300 million from Walker’s original offer. But state officials had concocted a clever plan to raise the final $80 million needed to fund the arena: the city and county would certify some of their uncollected debt so the state could collect it.
Barrett made it clear he couldn’t support a plan “to collect debt from indigent people to support a $500 million arena,” as one city insider notes. Abele, however, not only agreed, but offered to take on the entire $80 million cost.
Republicans were so grateful, they have lavished praise on Abele. “Many at the bargaining table — including top GOP leaders, Gov. Scott Walker and Bucks officials — walked away speaking highly of the county leader,” Milwaukee Journal Sentinel columnist Dan Bice has written. “They contrasted Abele’s can-do approach with Barrett’s much more defensive negotiating posture.”
This is the paper’s tough “No Quarter” columnist, swallowing this nonsense? The only people at the “bargaining table” were state, city and county officials and Bucks representatives. All had everything to lose if Abele didn’t bail them out. Republicans had been put in a horrible position by Walker and needed a fall guy. The Bucks didn’t want to pay a nickel more for the arena. And Abele bailed them out.” Abele impressed many people, especially the governor’s office,” Vos told Bice. “He definitely has ideas and wants to solve problems.”
The end result of this new plan was that the portion of the public costs being paid for by Milwaukee taxpayers has risen from 12 percent to 78 percent, as I’ve written. This seems rather germane to a column talking about Abele’s leadership as chief representative of the county’s taxpayers, but Bice doesn’t mention this. (Nor has the paper ever done this math for its readers.)
As for the uncollected county debt that will help pay for the arena, the most detailed estimates to date suggest there is almost no such debt to collect as most of it is actually owed to victims of crimes or is old and uncollectible. No, Bice doesn’t report these details, either.
Bice never notes that the entire negotiating problem was caused by Walker’s boneheaded decision committing the state to pay almost all the public costs. He never questions the unwillingness of Vos and Walker to “be creative” by raising the Wisconsin Center tax to pay for the arena and an expanded convention center. Yet he lets us view state officials positively for unwillingness to spend what Walker committed them to, while portraying Barrett as the bad guy for being concerned about the costs for Milwaukee taxpayers. All of which leaves readers with the idea that Abele is this “creative” guy because, well, he agreed to eat $80 million in payments over 20 years. As I’ve noted, it’s unlikely this will be funded by uncollected debt, and is likely a cover for the state cutting its aid to Milwaukee County.
Bice’s story would make a little more sense if he was writing for the Waukesha-Ozaukee-Washington counties — call it the WOW Journal Sentinel — but is stunningly uninformative if the paper still sees itself as also serving its Milwaukee County readers.
Speaking as a city and county taxpayer, I appreciate Barrett’s unwillingness to raise property taxes to pay for the arena. I appreciate the fact that city officials have been “defensive” negotiators — or what might better be termed “tough” negotiators — in demanding that the Bucks pay property taxes on all development beyond the arena, including the practice facility, adjoining restaurants and other development, all of which was going to be tax-exempt in Walker’s original proposal. (I’m told the plan has been amended to remove these exemptions, but I’ll believe that — gladly — when I see it.)
As for Abele’s promise to improve the arena deal to “bring more value” to it, I see no evidence that happened. All the data suggests an NBA arena has little or no economic impact on a city. Adding a provision empowering tougher debt collection won’t help the economy. And Abele’s latest idea, offering county land for $1 to the Bucks for ancillary development, adds insult to injury for taxpayers. If the land is really so hard to develop (and the city’s success developing its portion of Park East land suggests that’s untrue), then why not offer the land to all developers for that price and pick the best proposal? As far as I can tell, Abele’s “can do” approach consists of not negotiating with the Bucks or state officials over anything and simply complying with any idea they suggest.
Bice, by the way, has tweeted to complain about the New York Times story on Michael Grebe borrowing from an earlier piece he co-wrote for the Journal Sentinel. In my last column I noted the Times seemed to use information without crediting the JS as the original source, and I’m glad to see Bice now agrees that publications should credit those they borrow from.