Re: Sonics owners push tax rebates
An interesting and very relevant article:
Urban Tulsa Weekly - Tulsa
This has been a great legislative session -- for the most part. The Republicans in Oklahoma City have hit a number of three-pointers this year, but this last week they committed a $60 million foul on the state's taxpayers.
Unlike many of their Washington counterparts, Oklahoma's Republican legislators appear to take their campaign material seriously. They've used their majority in the State House of Representatives and their shared power in the State Senate to implement as much of their platform they can, limited somewhat by the Democrats' control of the Governor's Mansion.
Just within the last week or so, the Legislature approved term limits on all statewide constitutional officers (voters will make the final decision in the fall) and advanced a bill to fight voter fraud by requiring an ID at the polling place.
Modernizing and streamlining government has been a major focus this year, with bills to study centralizing state administrative services, to allow state government to accept vendor bids and payments electronically, and to create a State Office of Information Services to help every state agency use computer technology to improve efficient delivery of services.
Republicans in the Legislature are even working to increase the power and authority of the Governor, even though their party doesn't control that office. Oklahoma has one of the weakest chief executives in the nation, a legacy of the populist progressives who shaped our state's constitution in 1907.
This year the State House has passed bills that would make state agencies directly accountable to the Governor and would give the Governor the ability to replace up to 40 percent of the membership of any state board or commission. The next governor may actually have the authority to implement his platform.
On each issue they've found allies on the other side of the aisle. An "omnibus" bill combining multiple pro-life provisions not only passed with large bipartisan majorities, it survived Gov. Brad Henry's attempt to abort it with his veto pen. The bipartisan majorities in each house held together to deliver the first veto override of Henry's tenure.
Earlier in the session, House Republicans even purged themselves of Speaker Lance Cargill and, with him, the same kind of wheeler-dealer mentality that led to the end to Republican control of Congress and sent several Republican congressmen to prison.
But this last week, Republican legislative leaders succumbed to a belated bout of March Madness. Under their guidance, and with the support of their Democratic colleagues and Gov. Henry, Oklahoma taxpayers have been obligated to give $60 million to the millionaires and billionaires who are moving the Seattle Supersonics to Oklahoma City.
The subsidy took the form of SB 1819, an expansion of the Oklahoma Quality Jobs Program to include "those activities defined or classified in the NAICS Manual under U.S. Industry No. 711211 (2007 version)." A visit to the Census Bureau website reveals the meaning of that code number: "Sports Teams and Clubs."
The Quality Jobs Program provides cash rebates of up to 5 percent of payroll costs to companies as an incentive to create new manufacturing or skilled service jobs in the state. Service jobs only qualify if 75 percent of the company's sales are out-of-state.
The idea is that these companies are bringing dollars and good jobs into the state, and the resulting increase in payroll and consumer spending will bring in more than enough new revenue to the state treasury to compensate for the payroll rebates.
An NBA team doesn't fit those criteria, no matter how much it may boost our state's self-esteem. Instead of bringing new revenue in from out of state, a pro basketball team will merely reapportion the way Oklahoma City residents spend their disposable income.
Study after study shows that a major league sports team doesn't grow the local economic pie; it simply competes with other entertainment and leisure businesses for a share of the same pie. The Sonics owners made that very case in a Seattle courtroom, as part of their effort to break the lease on Seattle's Key Arena, arguing that the team had a negligible impact on the local economy.
A couple of special provisions were added to the Quality Jobs Act to make it an even sweeter deal for the Sonics and a much worse deal for taxpayers. While the tax rebate usually only applies to salaries that are taxable in Oklahoma, the Sonics will still get the rebate "regardless of whether Oklahoma income tax is or will be due on such wages." So we'll be paying the subsidy on a player's salary, even if he maintains residency and gets paid in Washington state, which has no state income tax.
And while Quality Jobs rebates are limited to 10 years for all other industries, sports teams get rebates for 15 years. All this for 41 home games a year.
I wasn't surprised that Oklahoma City area legislators would push for the NBA subsidy, although I would have hoped that Republican leaders like Glenn Coffee, co-president pro tempore of the State Senate, would be less enthusiastic about showering taxpayer dollars on private companies.
I was surprised to see Tulsa legislators falling over themselves in support of the bill, led by Republican House Speaker Chris Benge. His press release about the bill crowed: "On ESPN alone, Oklahoma will be mentioned every game night and be seen by 90 million viewers. That is not to mention scores being listed on just about every TV station and in every newspaper in the country."
The release reveals we're paying a high price for that exposure: In return for the $60 million subsidy, "[i]t is estimated that local and state tax revenue to the state over a 15 year period will be $11.2 million." That's a revenue loss of $48.8 million.
Other Tulsa-area Republican lawmakers voting in favor of the hoops subsidy: State Sens. Jim Williamson, Mike Mazzei, Brian Crain, Bill Brown; State Reps. Dennis Adkins, David Derby, Fred Jordan, Mark McCullough, Ron Peterson, Earl Sears, Dan Sullivan, Sue Tibbs, John Trebilcock, and Weldon Watson.
Tulsa County Democrats happily played reverse-Robin Hood, too: State Sens. Tom Adelson and Nancy Riley, and State Reps. Scott BigHorse, Darrell Gilbert, Lucky Lamons, Jeannie McDaniel, Eric Proctor, and Jabar Shumate all voted for the bill.
(A few Tulsa-area legislators had the courage and good sense to vote no: State Sens. Roger Ballenger (D), Randy Brogdon (R), Mary Easley (D), Judy Eason McIntyre (D), Joe Sweeden (D) and State Reps. Rex Duncan (R), Skye McNiel (R), Ron Peters (R), Pam Peterson (R), and John Wright (R).)
Getting beyond the folly of subsidizing pro sports, this bill shows that Tulsa's legislators still don't know how to use their leverage to Tulsa's benefit.
If our legislators had all voted no, the bill would have been defeated. By himself, Speaker Benge had the power to halt the bill's progress. At the very least, Tulsa's delegation could have insisted on some concessions from the team's ownership -- say, 10 home games a year at the BOk Center.
Why would fiscally conservative Republicans vote to give $60 million to businessmen who regard that amount as pocket change? Sure, team owners Aubrey McClendon and Clay Bennett are big political donors. Bennett's in-laws own the state's biggest newspaper -- someone you don't want on your bad side during an election year.
But I think something more elemental and emotional was at work--these legislators were swept away by the idea that they could take partial credit for Oklahoma becoming a major-league state. Undoubtedly, the lobbyists hired by the Sonics' owners did all they could to nurture that emotional response and to shut down critical thinking about costs and benefits.
Another mystery: Why would the NBA abandon the nation's 14th largest media market for the 45th largest market? Metro Seattle has almost three times as many TV households as metro Oklahoma City. There are almost as many people in the Seattle metro area as live in the entire state of Oklahoma.
According to one commenter on fieldofschemes.com -- a website that tracks pro sports teams' successful extortion of public funds for private benefit -- "This move is all about NBA franchises maintaining leverage in stadium negotiations. David Stern made the call that downsizing one franchise's media market is less of a hit than losing stadium negotiating leverage in 30 markets."
Fourteen years ago, the city of Seattle demanded a large share of revenue from concessions and premium seating to pay back the city for fronting the money to renovate KeyArena. That kind of deal--the team paying its own way--was intolerable to the NBA, and it had to be punished.
It's a shame that Tulsa's legislators allowed themselves--and our tax dollars--to be used to destroy the tiny amount of leverage cities still had in their dealings with NBA teams.
I just have one request of the team owners in exchange for the taxpayers' largesse: Keep the short form of the team's name. It's only fitting that the city Fortune magazine called the Fast Food Capital of America should be home to a basketball team called the Sonics. I can't wait to see their dancing tater tot mascot.
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