Subverting Democracy to Subsidize Billionaires
There are needs and there are wants. And then there are priorities.
A crippled child or a victim of crime has needs, while no doubt some people fervently want a bike path built or a brand new sports arena.
That’s where priorities enter the picture.
What are the needs, wants, priorities and responsibilities in Sacramento, California’s capital?
First, the city is presently $2 billion in debt — roughly $5,000 per resident. Half of that goes for pensions and health benefits for retired workers. Much of the rest is owed to pay for past economic development projects.
Second, Sacramento ranks second for “most violent” city in California. Second for “property crimes” too.
Third, since 2007, the region has lost more than 10 percent of its jobs, with one in six homes in Sacramento County in foreclosure.
“What do the leaders of this failing city, home to only a quarter of the region’s residents but with a disproportionate share of its poor and its highest and most regressive taxes, tell us is the best way to combat the region’s decline?” asked Mark Paul in an article for Zócalo Public Square.
His answer? “They want the city to take up the whole burden of an arena subsidy —currently estimated at no less than $255 million, roughly equivalent to an entire year of city tax revenue.”
Mayor Kevin Johnson, former superstar point guard for the Phoenix Suns, doesn’t want to lose the town’s National Basketball Association franchise, the Sacramento Kings. Meanwhile, the NBA threatens to move the team to Seattle if the city — meaning the taxpayers, of course — won’t cough up the bucks to build a new stadium. My bet is that the project’s price tag, including interest, would rise above $255 million.
The mayor, city managers and the council argue that keeping the Kings in Sacramento is worth the cost. “With all due respect to Seattle, I do hope they get a team someday, but let me be perfectly clear it is not going to be this team,” Johnson said in announcing he’d lined up potential new Sacramento buyers. “Not our team. No way.”
For decades, our officialdom cited economic wizards whose forecasts predicted that spending on sports arenas would serve as a huge multiplier, a massive engine of economic growth. Today, a true consensus exists among economists, summed up by Allen Sanderson, an economist at the University of Chicago: “If you want to inject money into the local economy, it would be better to drop it from a helicopter than invest it in a new ballpark.”
Helicopter pilots in the Sacramento area with lobbying skills may be able to wrangle a job.
Mayor Johnson continues to work to keep an NBA team in the city, including with discussion of a subsidy from city taxpayers to build an arena. The reasoning? Lawyers representing a grassroots coalition against a subsidized sports arena said the city manager told them “the residents of Sacramento aspire to this type of civil amenity in their community no matter what the cost.”
On the political left, lots of people worry about collusion between big business and government. The prospect of a new sports arena — with ample amenities and big luxury boxes, where the titans of industry might welcome high-ranking local political officials as guests — pales against the plethora of truly life-impacting needs currently languishing unmet in Sacramento.
On the political right, the very deal smacks of crony capitalism, the destruction of the principle of free markets — without even getting to consideration of the fact that it constitutes the poor subsidizing billionaire team owners and millionaire players.
I find myself agreeing wholeheartedly with both sides.
Which brings us to the real problem: Who is to decide?
The first responsibility of popular government is to represent the people. But that’s not the first inclination of elected politicians. Mark Paul, a Kings fan and co-author of the book, California Crack-Up, warns to “expect Sacramento Mayor Kevin Johnson and his allies on the council to do everything they can to avoid making voters part of the conversation.”
The people of Sacramento have spoken clearly against subsidizing an arena. Back in 2006, a sales tax hike to build a new one lost massively, with more than 80 percent of voters saying, “No.” Last year, the city council voted against even allowing a previous subsidy plan to go to voters.
The city attorney set off alarm bells when he suggested an upcoming March 28 council vote on a “term sheet” concerning city subsidies would not be subject to a referendum. Municipalities are notorious for evading voters’ referendum power. Years ago, Santa Clara County officials were able to subsidize a sports stadium for the San Francisco 49ers by claiming their move was an administrative action and not a legislative one.
Last Thursday, attorneys for “a nascent coalition of community groups, responsible businesses and local residents” sent a letter putting the city on notice that their right to take any city decision to subsidize a sports arena to a voter referendum would not be denied.
This week, the mayor and former NBA star is set to unveil more of his plans regarding the Kings and his hoped-for subsidy.
That any city would spend a year’s worth of tax revenue on an arena for a billionaire’s sports business is hard to stomach. That a city government would do it unilaterally while trying to block a vote of the people, impossible. [further reading]
March 17, 2013
This column first appeared on Townhall.com.