A leading House Democrat proposed Monday to add the state sales tax to team jerseys and other pro sports merchandise to help cover the state's share of the new Vikings stadium.
The proposal from Rep. Ann Lenczewski of Bloomington also extends the state sales tax to the purchase of box seats and luxury suites at pro sports venues. Lenczewski, chairwoman of the House Taxes Committee, said she's responding to concerns about large shortfalls in taxes collected from electronic gambling that were supposed to be the primary funding source for the state's roughly one-third share of the $975 million, downtown Minneapolis stadium.
"We're seeing there seems to be a little problem in getting the financing quite right at least in the early stages," she said.
When lawmakers passed the stadium bill last year, they authorized new electronic gambling in bars and restaurants and ear-marked tax revenue from those pull-tab and bingo games to pay off stadium construction bonds. But in the months since the games were introduced, tax revenue has fallen far short of initial projections.
On Monday, Minnesota Public Radio News reported that the daily sales per gambling machine in March were just $87. The revenue estimates attached to the stadium bill counted on sales of $225 per day. Those games "may flourish at a later stage, but it's easier to fix something at the beginning than to wait until it's a bigger problem," Lenczewski said.
The first stadium bonds are supposed to be sold in August. If the gambling tax revenue and several small-scale backup plans don't raise enough to make bond payments, then the money to do so would have to come from the state's general fund.
A growing chorus of lawmakers has suggested revisiting the stadium financing plan during the current session to avoid a raid of the general fund. An October groundbreaking is planned for the stadium that's supposed to open in time for the 2016 football season.
Gov. Mark Dayton said Monday that while he continues to view concerns about gambling revenue as overblown, he's not opposed to discussing a backup plan.
"I don't want to see this project fail. It shouldn't fail," Dayton said.
Lenczewski's proposal to tax pro sports memorabilia and stadium box seats is not a new one, and was frequently suggested throughout the long years of discussion at the Capitol about funding for a new Vikings stadium. In addition to jersey, T-shirts and other clothing, Lenczewski's bill would also apply the state sales tax to trading cards, photographs, equipment with pro team logos and other "one-of-a-kind items related to sports figures, teams or events."
Lenczewski said many sports fans told her they would be willing to pay higher sales taxes on game gear to help pay for stadiums.
"Sports enthusiasts across Minnesota who enjoy having professional sports in Minnesota would be contributing just a little bit if they choose, since these are obviously discretionary purchases," Lenczewski said. The taxes would apply to the state's other pro teams whose facilities, Lenczewski pointed out, have also benefited from public subsidies.
Lester Bagley, the Vikings' point man on the new stadium, said the team had a deal with lawmakers and the Dayton administration last year that there would be no further state intrusion on revenue streams that benefit the team. Still, he said he hadn't had time to review Lenczewski's proposal and didn't immediately say the team would oppose it.
"The Vikings are focusing on our contribution," Bagley said, referring to the team's $450 million share of the project. The National Football League recently authorized a $200 million loan to the Vikings to cover part of that cost. "They need to sort out the state's contribution," he said of lawmakers.
Bagley said Vikings officials also agreed to a request from the Dayton administration to provide input on how the electronic games could be marketed better, with a goal of boosting sales.
Lenczewski said she'd hold a hearing on her proposal Wednesday in the House Taxes Committee.
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