Copyright 2014 Journal Sentinel Inc.
A consultant hired by the Miller Park stadium district now estimates the sunset date for the stadium sales tax could come as late as 2021.
A year ago, the consultant, PFM Group, said the 0.1% stadium sales tax could end between 2016 and 2020. Two years ago, the consultant estimated the tax could end as soon as 2017.
The new estimate was given to the Miller Park stadium district board on Tuesday.
The sales tax, used to finance and construct Miller Park, began in 1996 and is collected in Racine, Milwaukee, Waukesha, Washington and Ozaukee counties. In 2013, just over $26.1million was collected in the five counties. The new sunset estimate is based on historical sales-tax growth patterns and the district's own investments. In recent years, the average annual growth in sales tax revenue has been disappointing, especially compared with earlier years.
Mike Duckett, the district's longtime executive director, said that when enabling legislation creating the sales tax was being considered in 1995, proponents projected a 5.5% annual growth rate in salestax revenue.
That hasn't happened. "If the 5.5% projected annual growth rate of sales tax revenue had truly occurred, the sales tax could be retired in 2014," Duckett said in an email.
Lackluster sales tax growth, he said, has resulted in a reduction in sales tax collections of more than $112 million over the past decade. Last year, the district experienced only a 1.39% growth in sales tax revenue. In three of the past five years, the district has seen a decline in sales tax growth due to the effects of the recession. Since the tax began in 1996, the district has averaged a 2.74% annual sales tax growth, about one-half of the originally predicted rate.
"If the historical economic trends experienced by the district to date should continue, the sales tax could be retired sometime between 2018 and 2020," the PFM report said. "However, if sales tax growth continues to be modest or even decline, and interest rates on investments continues to be lower than the long-term average, the district might not be able to retire the sales tax until 2021 or later."
Duckett said the relatively slow growth of sales tax revenue does not mean the district will have to collect more money to meet its long-term obligations. "However, due to economic conditions, it will simply take longer to collect the same amount of money," Duckett said.
The new projections also are significant in a larger context. There has been some discussion about enacting a new sales tax or extending the Miller Park stadium sales tax to address the long-term capital needs of the region's cultural, entertainment and sports facilities.
So far, the county boards in Racine, Ozaukee and Waukesha counties have gone on record in opposition to a regional sales tax to help finance and construct a new sports arena to replace the BMO Harris Bradley Center.
State law requires that once all debt to finance and construct Miller Park is paid off and a fund has been set up to pay for maintenance and capital improvements, the district can retire the sales tax. Don Smiley, chairman of the Miller Park stadium district board, has said the main priority is to retire the tax as soon as possible.
Extending the Miller Park stadium tax would require new state legislation. Miller Park was constructed at a cost of $393 million, according to the district, though the Legislative Audit Bureau in Madison disputed that amount in a 2002 report, saying $413.9 million was spent through December 2001.
According to district figures, total debt service for the stadium is expected to be $524 million through 2029. A total of $205 million remains to be paid off.
In a report to the district, Duckett said the district's own expenses have decreased every year since the stadium opened in March 2001. Yet at the same time, the district's annual rate of return on its own investments has been approximately 2% over the past five years.
Copyright 2014, Journal Sentinel Inc. All rights reserved. (Note: This notice does not apply to those news items already copyrighted and received through wire services or other media.)
Copyright, 2014, Journal Sentinel, All Rights Reserved.