On Tuesday, July 28, the Assembly met to concur in Senate Bill 209, the proposal to finance the construction of a new arena for the Milwaukee Bucks.  (The Senate passed SB 209 two weeks ago.)  The final vote was 52-34, with bipartisan support and bipartisan opposition.

Although it was a tough decision, I ultimately voted for SB 209 because I believe the state will see a significant return on its investment.  Under the funding plan of which SB 209 is a part, the team owners will cover half the construction costs, about $250 million.  The other half will be paid by public dollars from a number of public sources.  The City of Milwaukee will pay for a new $35 million parking garage and provide $12 million in bonds for tax incremental financing.  The Wisconsin Center District (WCD), a public entity that owns and operates a number of other venues in Milwaukee, will issue bonds to fund the remaining portion of the public half of the costs, about $203 million.  To cover the debt service on those bonds, the WCD itself will pay $93 million plus interest raised through an extension on the taxes it collects on hotel stays, car rentals, and food and beverage sales in Milwaukee County.  Milwaukee County will contribute $55 million plus interest over the next twenty years via an annual $4 million reduction in its aid from the state; the state will instead transfer that $4 million to the WCD.

The state's share will be equal to the county's - $55 million plus interest (a total of $80 million) paid out over twenty years - plus a one-time $10 million payment to the Bradley Center to help retire its remaining debts.  In other words, the state will pay $4 million each year - really closer to $3.5 million, once you take into account the state's share of a two-dollar surcharge on tickets sold for events at the Bradley Center and the new arena.  In return, the state expects to collect about $6.5 million in income taxes from NBA players each year.  The $2.5-3.0 million annual difference in revenue over expenditures will benefit Wisconsin taxpayers as a whole, not just residents of southeastern Wisconsin.  This doesn't even count the indirect benefits the state and its residents stand to get from increased economic development in Milwaukee.

SB 209 is a significant improvement over Governor Walker's original proposal for the state to issue $220 million in bonds to pay for its share in building the construction costs, and that's not even including the interest on those bonds.

Had SB 209 failed, there was a real possibility that the Bucks would have left Wisconsin and the Bradley Center been closed down and demolished - but Wisconsin taxpayers still would have been on the hook for paying interest on earlier bonds the state had issued to assist the Bradley Center, and they would have gotten no benefit in return.  It would have been pure loss.  Those bonds will have to be paid and retired no matter what, but at least under SB 209 the Bucks will continue to generate revenue and economic development.

The one thing I did not want SB 209 to do - and it would have been a dealbreaker if it had - was to enmesh the state in any additional costs beyond financing the new arena's construction.  I was particularly concerned that taxpayers would find themselves footing the bill for ongoing operation or maintenance costs, but that is not the case under SB 209, which limits the state's contribution to the $80 million described above.  The bill also requires that any lease agreement between the WCD and the Bucks must include language that the team, is responsible for "equipping, maintaining, operating, improving, and repairing" the arena once it is complete.  The bill further specifies that neither the state, the City of Milwaukee, nor Milwaukee County, will be responsible for those things.  While future Legislatures may be approached for additional financial assistance, nothing in SB 209 obligates the state to provide that assistance.

SB 209 will now go to Governor Walker for his signature.  You may read the nonpartisan Legislative Fiscal Bureau's memos about the bill and the Senate amendment that was added to it.