How Milwaukee leaders could use stealth tax to fund Bucks arena without anyone taking the blame

As part of his campaign to get funding for a Milwaukee Bucks arena approved by Memorial Day, Wisconsin state senator Scott Fitzzgerald has called a meeting of the minds for tomorrow, bringing together state, city, and team officials to discuss, presumably, how none of them have any ideas for how to actually pay for the thing. And maybe actually play a physical game of hot potato with the $500 million bill, wouldn’t that be cool?

For a refresher on why exactly there’s no money for this thing, we can turn to Milwaukee Magazine’s Matt Hrodey, who points out that Fitzgerald’s plan to have a state board lend the money lacks a viable way to pay off the loan, something everyone is still waiting for Gov. Scott Walker’s secret idea to fund beyond his old idea of using player income taxes and crossing his fingers that NBA salaries soar; meanwhile, it would require the city to come up with its own pile of money, something it would have trouble doing given that the arena wouldn’t pay any property taxes of its own, and the state has dramatically restricted the city’s borrowing power.

Hrodey does come up with one possible way for the city to contribute, but it would amount to a stealth property tax surcharge. It goes like this: The Board of Commissioners of Public Lands, which Fitzgerald is proposing as lender for the public arena funding, loans the city a pile of cash. In that case,

If the BCPL also lends a chunk – $25 or $50 million – to the city, county, or both, state law would require each entity to raise its tax levy by an amount sufficient to pay off the resulting debt service on the loan. This tax would have to be “separately designated” and calculated apart from the usual municipal levy. And to boot, it would be “irrepealable until the loan and all interest on the loan are fully paid.” If for some reason the local government was to miss a payment, it would be automatically deducted from state aid.

Milwaukee Mayor Tom Barrett, meanwhile, has said he won’t raise property taxes for a Bucks arena, which would seem to kill this plan, but you have to figure there’s going to be pressure for him to cave in to make a deal happen. One possible out, which Hrodey kind of hints at but doesn’t say outright: Barrett could agree to take out BCPL loans and then pay them back by some fanciful revenue stream — say, tax-increment financing based on increased property taxes paid by development around the arena, or hell, maybe e-pulltabs. Then once the revenues fail to arrive, he (or whoever was mayor by the time anyone noticed the revenue shortfall) would be forced by the big bad state government to raise property taxes to fill in the gap. Voila, taxes raised for the Bucks, and nobody is to blame!

All of this could be moot, meanwhile, if the state budget projections come in as poorly as they could in mid-May, leaving everyone involved scrambling to avoid looking like they’re throwing money at the Bucks while slashing spending for everything else under the sun. But even then, that’s only a temporary obstacle: If Fitzgerald can put together even the vague outline of a plan in the next few weeks — say, with the state paying off a BCPL loan with pretend player income taxes, and the city paying off a BCPL loan with pretend TIF money — there’s plenty of time to implement it next year after everyone has forgotten where the money is coming from, and the lobbyists have had another year to make all the politicians involved just want this issue to go away, already.

Hey, I think I just solved the Bucks arena funding problem! If by “solved” you mean “found a way to stick taxpayers with the bill without any politicians having to lose their jobs over it,” that is, and I’m pretty sure that’s what Fitzgerald and company have in mind. Now they can knock off early at tomorrow’s meeting and go for custard.