As many, many of you wrote to point out, Friday’s news roundup neglected to cover the news out of Sacramento that the city is having to dip into its general fund to pay off construction bonds on the Kings arena that opened in 2016. In the words of the Sacramento Bee:
The city of Sacramento’s plans to use parking revenue to pay off $273 million in construction bonds for Golden 1 Center has developed funding cracks, forcing officials to use money from the city’s general fund, a pot of money that also pays for homelessness services, libraries and parks.
The problem: Too many empty spaces in Sacramento’s five garages, a continuing hangover from the COVID-19 pandemic. This has forced the city of Sacramento to divert from its $771 million general fund more than $5.7 million over the past two years to pay off the construction bonds.
That’s all sort of true as far as it goes. City officials’ justification for putting public money into a new Kings arena was, in part, that some of it would come from fees to park at city parking garages around the new downtown arena — not that much of it, mind you, but about a 10% slice, according to the city’s own numbers. (The Bee says 30%, but it looks like they’re including money diverted from debt payments on parking garages once those are paid off.) Once it turned out that people didn’t want to pay top dollar to park at city-owned garages for either Kings games or anything else downtown — though the Bee blames COVID, it also acknowledges that “even prior to the pandemic there existed a shortfall between the actual and the projected parking revenue” and says that more shortfalls are anticipated in future years — this meant covering the gap with money from the general fund.
This certainly sounds bad: Money that could be going to libraries and parks is being spent on a basketball arena owned by a near-billionaire! But, then, that was going to be the case regardless of how the parking revenues worked out. The parking shortfall has been clear at least since 2020, when the city reported it might have to cut city services to cover arena debt payments, after which I wrote here:
Sacramento is short on tax revenue to pay off bonds on its Kings arena and convention center, but honestly that’s just another way of saying that it spent a bunch of money that it didn’t need to and now the chickens are coming home to roost when “don’t worry, there’ll be plenty of tax money” isn’t working out so well. Would it be any better if the city had spent the same money on the arena and then received enough tax revenue to pay it off but couldn’t then use that money for other needed things?
The problem with spending money on sports projects doesn’t arise just when there isn’t enough tax revenue to pay off the anticipated costs; it’s that even if the tax money does flow as expected, that’s still money that could have been spent on something else. It’s why, for example, all the handwringing over falling-then-rising electronic pulltab gambling revenue in Minnesota that was supposed to go to pay for the new Vikings stadium was in the end pointless: Yes, it’s better for the government if it’s bringing in more revenue, but it would have been better with or without being saddled with a nine-figure stadium expense.
This is actually one of the most pernicious types of bad journalism: judging a public project based on whether the local government was accurate in projecting how quickly it could siphon off tax revenues to shovel in the team owner’s direction. We just went through it earlier last week, in fact, with the Washington Nationals stadium, which was deemed to be a success because it was getting paid off early, but still with the same amount of public money. It’s a bit like justifying an idiotic personal expense — Fyre Festival 2.0 tickets, scam swimming pool installation — on the grounds that “Well, at least I got a raise, so I can afford it”; sure, but you also could have afforded something you really needed with that money, if you hadn’t blown it on something you didn’t need. The same goes for Sacramento parking revenues: If the city hadn’t built an arena with them, it would still be trying to figure out how to cover an unexpected shortfall, but at least it wouldn’t be doing so while making $18.3 million a year in additional bond debt payments.
So the good news, such as it is, is that Sacramento isn’t having to divert any more money from public needs to the Kings arena than it was in the first place. The bad news is that its parking revenues are turning out to be lower than the rosy forecasts made to help justify the arena, so it has less money to spend on the arena or anything else. That’s still pretty bad, but if you’re just now getting angry about the public expense, you’re doing it wrong.