ECM Editorial: Vikings stadium funding questions place stress on public, Legislature
ECM Editorial Board editorial — When the Minnesota Sports Facility Authority unveils the design for the new Minnesota Vikings stadium on May 13 at the Guthrie Theatre, the public will get a glimpse of the grand edifice that is planned to be built over the next three years.
When ground is broken on the Metrodome site in Minneapolis this fall, the public will know for certain that the $975 million stadium will be built.
What is less certain, however, is the funding piece for the stadium that was approved by the Legislature in 2012. For stadium fans, it will take patience to wait until July of 2016 when the facility is slated for completion. It will take an equal amount of patience on the part of the public and legislators to feel comfortable that funding is available.
Much discussion has emerged over the lack of tax dollars flowing to the state from electronic pulltabs, one of the key pieces in funding the stadium. The second vital funding source from charitable gambling venues is electronic bingo. E-bingo is just now coming on line.
There is good reason for funding fears. E-pulltabs have not generated the funding once predicted by the Minnesota Charitable Gambling Board and the board admits it. The state did not anticipate the snail’s process of establishing charitable sites for sales of electronic pulltabs. Electronic bingo almost became a forgotten partner in the funding piece.
For various reasons, many smaller charitable gambling sites have said no to electronic pulltabs. Some have identified start-up costs and fees, in addition to state taxes, as major roadblocks. Other say e-pulltabs wipe away the social fun a group of friends may have sifting through a stack of paper pulltabs. It may not be such with e-bingo.
The state was remiss in not identifying the electronic pulltab concerns early on. Such action may have helped lawmakers a year ago as the legislation was crafted. For stadium opponents, the door is now open for a barrage of criticism, including calls by lawmakers to redo the agreement with the Vikings. Fool’s errands of the like serve no good purpose. Those taking shots at the Vikings seem to ignore that the NFL club will pay an estimated $15 million a year to the sports facility authority, including $8.5 million in rent alone. Other user groups will contribute $2 million throughout the year.
State leaders from Gov. Mark Dayton on down have long preached patience as the funding mechanism for the stadium unfolds. We would agree that patience is needed, but faced with many unknowns it is worrisome to just assume the tax dollars from charitable gambling will somehow magically appear in the future.
But we give state leaders the benefit of the doubt that patience is needed through the balance of this year. As stated in interviews with this editorial board, officials of the gambling board and the sports authority remain confident that the funding picture will see major improvements. The number of active charitable gambling sites offering electronic pulltabs is growing and more game manufacturers and distributors are being approved by the state.
The same holds true for electronic bingo. The impact of e-bingo linked to hundreds of sites could be a game changer.
And patience must be the rule based on the unknowns. It is still uncertain the extent of the first bond sale slated for late summer or early fall. The state continues to crunch numbers to determine if all or part of the financing bond is issued this year. That decision will determine the actual debt service and the amount the state will need to re-pay next year. Early state estimates said debt service payment could be as high as $30 million a year.
Make no mistake about this. The bonds are backed by the state’s general fund and any shortage in stadium debt service must come off the top. By law, it will be the Legislature that must each year appropriate dollars from the general fund to address any debt service shortage. Failing to do so would result in the state defaulting on its obligation.
The legislation approved last year includes back-up funding sources. A Minnesota State Lottery game earmarked for the stadium is projected to provide $3 million a year for bond support. Once the stadium is open, a tax on luxury suites would bring in another $2 million a year. A proposal removed from last year’s bill that called for a sales tax on sports memorabilia could have produced as much as $19 million a year depending on the extent of the tax.
The memorabilia tax is again being considered this session and should be passed if lawmakers want to hedge their bet. It amounts to a user fee that is paid by those closely associated with professional and Division I collegiate athletics.
Another factor that has received little attention is that state charitable proceeds are growing by 6 to 7 percent this year. The electronic games are certainly a factor here while paper pulltabs continue to sell well. While tax income from electronic pulltabs is now projected to pull in an estimated $1.5 million this year, the total tax contribution from all forms of charitable gaming could well top $7 million. And with the e-games likely to grow, this estimate would seem conservative.
State officials and lawmakers must remain vigilant in monitoring this process over the remaining months of 2013. By year’s end, there should be clear picture of the funding levels that can be expected from charitable gambling.
If red flags continue to fly, more serious action will be needed from legislators. If serious funding holes are evident, racino backers are ready to plug that hole with tax revenues generated by slot machines at Running Aces Harness Park in the north metro. We taxpayers may not be off the hook yet.
It is not surprising that the funding picture for the stadium has become a hot button issue. It was controversial a year ago and will remain so. With the general fund potentially at risk for a financial hit in 2014, now is no time for state officials to relax as revenue streams for the stadium are rolled out. They need to make sure the projections work.
What should not be forgotten is the many benefits from three years of a huge construction project that will produce 7500 jobs and pump huge amounts of money into the economy. The end result will be a multi-purpose stadium with all the bells and whistles that will serve Minnesota well every month of the year and not just in the fall when the Vikings call it home. – An opinion from the ECM Editorial Board