Gov. Scott Walker announces “Pay Their Way” plan for new Milwaukee Bucks arena

MADISON (WITI) -- Governor Scott Walker announced Tuesday, January 27th a first-of-its-kind “Pay Their Way” plan to grow the economy and protect state taxpayers from the loss of current and future tax revenue generated by the Milwaukee Bucks. It is an announcement that even Milwaukee Mayor Tom Barrett is calling the most significant announcement since the team was sold.

"We're going to help the Milwaukee Bucks pay their own way to a new arena, and we're going to include it in our budget next week," Governor Walker said Tuesday.

Under Walker's “Pay Their Way” plan, a Sports and Entertainment District would be created to provide bonding authority to pay back a $220 million grant for a new sports arena.  The grant will be in the form of an appropriation bond issuance, paid back by projected growth in income taxes from the Bucks, as well as visiting teams, due to salary increases and new TV contracts.  No current base revenues would be used to pay for the bonds, and once the bonds are paid off, the tax growth would return to the state.

"I know there's a lot of talk and speculation before this about the so-called 'jock tax' -- that somehow we would raise that. We're not taking a penny out of money that's paid today by NBA players here in the state of Wisconsin," Governor Walker said.

Currently, the state collects about $6.5 million from NBA players. Governor Walker says those funds will remain in Wisconsin's general fund going forward. In the coming years, they're projecting that those funds will grow. The excess growth above that $6.5 million mark will be what's used to pay for the bonds.

"You can look someone in the face and say 'there's not a penny of new taxes' and 'there's not a penny that comes out of our current revenue stream.' This is all based on growth. This is the ultimate free-market fiscally conservative approach going forward," Governor Walker said.

Without a new arena, the Bucks would likely leave Wisconsin in 2017, costing the state nearly $10 million per year in income tax collections alone.  In addition, if no action is taken on the current Bradley Center, the state is still on the hook for as much as $100 million in maintenance and debt service costs, but without an anchor tenant to drive sales and bring business to the arena and local area.

If the Bucks are sold, the revenue from that sale would first go to pay back these appropriation bonds.

How the “Pay Their Way” plan works:

    It's a plan that even Mayor Barrett, who has run against Governor Walker twice, says he supports.

    "By using the proceeds that the players themselves will be paying in income taxes to help pay their own way, and I agree with that phrase. This is allowing the players to pay their own way to construct this. It becomes a win-win for the state, the community and for the Bucks," Mayor Barrett said.

    Former Bucks owner Herb Kohl, and current co-owners Marc Lasry and Wes Edens have said they'll contribute $250 million to the arena project.

    Milwaukee Bucks statement on the announcement:

    “We thank Gov. Walker for his leadership and commitment to building a transformative, multi-purpose arena that will help revitalize Milwaukee. The governor’s support brings Wisconsin closer to creating a new state-of-the-art venue and entertainment destination that will become an economic catalyst for the entire state. We look forward to working closely with Gov. Walker, the state legislature, local officials and the entire community to make this vision a reality.”

    Assembly Speaker Robin Vos (R - Rochester) issued the following statement:

    “This is a good starting point for the discussion on how to keep an important economic driver in Wisconsin. By asking the Milwaukee Bucks to pay their own way, we are protecting state taxpayers. However, it’s important to note that in order for the state to be a partner in this endeavor, we would expect the city and county to be part of the equation as well.  I look forward to discussing the proposal with the Assembly Republican caucus.”

    The Greater Milwaukee Committee issued this statement:

    "The Greater Milwaukee Committee supports transformative opportunities for our community to catalyze economic development and job growth.  The GMC is tremendously proud of the civic, private and governmental leaders who recognize the benefits for our community of focusing on real economic development and coming up with world class business solutions which result in community benefits not only in the region but throughout the State. In an era of economic recovery, the ability to transform and build on the successes of our community cannot be overstated.

    We commend Governor Walker for his effective leadership in recognizing that this community and the entire State are poised to be an outstanding participant in this economic development.  The Governor's thoughtful and effective approach to economic development in connection with the arena project with its clear protection of the taxpayers is exactly the kind of world class solutions that make a difference in a community."

    As for where the new Bucks arena will be located, we're told the search for a site is ongoing.

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