Wisconsin Gov. Scott Walker will sign legislation Wednesday committing state taxpayers to pony up $250 million to help build the Milwaukee Bucks a new basketball arena, drawing fire from tea party leaders, who say it undercuts his claims to be a fiscal conservative champion.
Battling for the Republican presidential nomination amid a crowded field, Mr. Walker argues that the financing deal — which splits the $500 million cost of the 17,000-seat, multi-use facility between the National Basketball Association team’s owners and taxpayers — is the only way to keep the franchise from leaving town.
But with economic studies showing stadiums and arenas rarely pay back the investments to taxpayers and municipalities, Mr. Walker is risking political capital nationally in greenlighting the deal, conservative leaders said.
“I think it is going to hurt him and it is going to be used against him by his opponents who are more fiscally conservative,” said Mark Meckler, president of Citizens for Self Governance and co-founder of Tea Party Patriots. “These guys are all doing opposition research on each other, so if you are a fiscal conservative and you want to paint him as someone who is not, this is good ammunition.”
Mr. Walker will sign the bill at the state fair, cementing a partnership he has struck with Milwaukee Mayor Tom Barrett — a Democrat who has lost two elections to Mr. Walker — to keep the Bucks from going to another city.
They say the NBA plans to move the team if it doesn’t get a new arena by 2017 and that losing the team will cost the state “at least $419 million over the next 20 years” in economic losses, including $299 million in income tax revenue.
The team, long owned by former Sen. Herb Kohl, a Democrat and founder of the giant retail chain, was sold last year to billionaire hedge fund managers Wesley Edens and Marc Lasry. The Bucks now play in the 27-year-old BMO Harris Bradley Center, the third-oldest arena in the league.
In justifying the subsidy to the Bucks, Mr. Walker said last month that it would be “cheaper to keep them” and that the state would get $3 back for every dollar it invests in the team.
But some opponents say interest payments would bring the total cost to $400 million and argue that it’s wrong to ask state taxpayers to finance an arena for a wealthy sports franchise.
“The new Bucks stadium proposal is still a bad deal for Wisconsin taxpayers. Government shouldn’t be in the business of financing private sports stadiums,” David Fladeboe, the state director for Americans for Prosperity, said last month.
Americans for Prosperity is part of the political network sponsored by Charles and David Koch, the billionaires who backed Mr. Walker in his battles with public workers over union rights, but the stadium represents a rift between the governor and his allies.
The arena proposal was relatively popular with politicians back home. It passed the state Senate in Madison on a 21-10 vote and the Assembly on a 52-34 vote.
Mr. Meckler said voters aren’t as enthusiastic. He pointed to a Marquette University Law School poll that showed almost eight in 10 registered voters were opposed to borrowing money for a new arena.
“Clearly in this case, and frankly in most cases, the citizens are against this stuff,” the tea party leader said. “These things tend to be done for big donors and business interests and for the ego of the politicians who want to be known as the guy that built the arena.”
Poor rate of return
Other critics have highlighted a 2007 study in the Journal of Sports Economics showing fierce competition among governments to entice existing sports teams to relocate to their areas “despite strong economic evidence that a professional sport team does not have a positive impact on the local economy.”
James J. Cochran, a professor of statistics at the University of Alabama and co-author of the report, told The Washington Times on Tuesday that Milwaukee will not prove the exception in its attempt to keep the Bucks, who have played in the city since their founding as an expansion team in 1968.
“I think the general consensus among economists is that this sort of thing does not generate economic growth,” Mr. Cochran said.
He added, however, that there are exceptions and Milwaukee could be one of them.
Mr. Cochran said Mr. Walker is in a pickle.
“He doesn’t want to run off people at home, but he has to demonstrate to the national electorate that he is a tough fiscal conservative — and there are 16 other people who will be happy to point out that he is not,” Mr. Cochran said.
He was referring to Mr. Walker’s numerous rivals in the race for the Republican presidential nomination.
Mr. Walker’s office said the projected revenue loss of $299 million is “based on actual and projected income tax revenues from the Bucks and the NBA.” The Wisconsin Department of Revenue described the projections as “conservative, yet reasonable” because they are based only on tax withholdings from the Bucks and other NBA teams.
“This plan protects taxpayers from the loss of current and future tax revenue generated by the Bucks and visiting teams and supports a new arena without tax increases or state bonding,” said Laurel Patrick, Mr. Walker’s press secretary.
Mr. Walker’s presidential campaign didn’t respond to an email seeking comment on the politics of the decision.
Mr. Walker has been viewed as one of the few candidates in the field who can unify the establishment and insurgent wings of the Republican Party. He is running third in national polls, behind Donald Trump and former Florida Gov. Jeb Bush, and is second — behind only Mr. Trump — in neighboring Iowa, which holds the caucuses that kick off the nomination contests.
Conservatives, though, have questioned some of his stances, including his support of the federal Renewable Fuel Standard that many on the political right see as an environmentally questionable subsidy for farmers who grow corn, which produces ethanol, the top renewable fuel right now.
Taylor Budowich, executive director of the Tea Party Express, said Mr. Walker will be given a chance to defend his record during the campaign, including his decision to support public money for the Bucks arena.
“If he can prove that it is cheaper to keep the team than let them go, then I think that could be a compelling argument understood by primary voters,” Mr. Budowich said. “It comes down to the raw question of what’s government’s role and where should taxpayers’ money go. That is the fundamental argument in this entire race: What is the role of government?”
He said Mr. Walker’s conservative credentials aren’t in question, but he will have to find a way to stand out among a host of other conservatives in the presidential race.
“This field is the strongest field we have seen in 30 years, so it is not good enough just to be a strong conservative. You are going to get scrutinized on your decisions and votes,” he said.