The proposal to add a trio of new taxes to the Vikings stadium deal ran into major league opposition in a House tax committee meeting tonight.
“We at the Twins have some concerns about this legislation,” Minnesota Twins spokesman Kevin Smith told the panel, as it weighed a memorabilia tax, a suite tax and a tax on the personal seat licenses the Vikings hope to sell to finance their new stadium. The memorabilia and suite taxes would also apply at Target Field.
“It really comes down to, for us and for our fans, the accessibility and affordability of our game, with the memorabilia tax and the suite tax,” Smith said.
VIDEO: Committee discusses what memorabilia would be taxed
The Twins’ Kevin Smith was joined by Minnesota Wild CFO Jeff Pellegrom who also told lawmakers that while the team supports a new Vikings stadium, they weren’t so thrilled with the financing plans as they were taking shape.
“To be clear, the Wild are generally opposed to source of revenue that tax our fans, but do not benefit them or the arena,” Pellegrom said.”It seems in plain terms unfair to us that there would now be an additional source that would tax on sources that would hockey fans, and benefit only a new Vikings stadium.”
Both teams play in publicly funded arenas.
DFL state Rep. Mike Benson, of Minnetonka offered a rebuke to the Twins, who are the beneficiaries of a county-wide tax to help fund their stadium: “Every time I purchase something, some of it goes off to pay for the Twins stadium,” Benson said. “I just think it’s time for those that got a lot of benefit from the public that they come forward and suggest some alternative sources, and not just say ‘Thank you for everything you gave us, now don’t expect anything more from us, because we got ours’.”
Sellers of the memorabilia weren’t wild about the plan, either.
Elwin Fraley owns Scoreboard Sportswear, based in Eden Prairie. He’s both a wholesaler and a retailer, with a shop in St. Paul’s Town Square.
He questioned why lawmakers were only taxing sports-themed clothing, and said he thought it would be particularly regressive.
“It’s gonna effect people of much more modest income,” Fraley said in an interview from a sportswear show. “The guy works out in a factory in Fridley, who wears the Vikings sweatshirt to work is gonna get taxed on what he wears to work, and the guy wearing the 400 dollar suit, the lawyer down in Minneapolis, and the $200 dollar pair of shoes isn’t going to get taxed. Where’s the fairness in that?”
He also warned that driving up the cost of sports wear might well backfire, and send buyers to the internet to purchase their jerseys and hats from out of state, where the items may be cheaper — hurting both stadium financing and small businesses like his.
The plan, though, got a mostly sympathetic hearing, even from Republicans who, while they didn’t like the idea of new taxes, at least credited sponsor and tax committee chairwoman Ann Lenczewski (DFL-Bloomington) with stepping up to deal with the issue that’s been dogging the stadium since the Legislative session began. Electronic pulltabs revenues are coming in at less than 5 percent of the original estimate.
The backup plan would put a 10 percent memorabilia tax would apply to jerseys, T-shirts, hockey sweaters, caps, commemorative balls, even foam fingers, miniature bats, and baby bibs with Twins logos. The suite and personal seat license tax would apply the state’s existing sales tax to “box seats, suites, sky boxes and similar facilities in stadiums and arenas,” as well as the personal seat licenses the Vikings are hope to use to finance part of their $477 million stadium contribution.
The woman who would actually sell those licenses thought the plan would be “helpful.”
“I think provide a good cushion here for the next year,” said Minnesota Sports Facilities Authority chairwoman Michele Kelm-Helgen. “It makes a lot of sense, and it was part of the agreement last year.”
The original stadium bill did include a sports memorabilia tax. But opposition to new taxes helped carve those provisions out of the bill in the end.
The Vikings, who agreed to pay for about half the stadium, took a very dim view of the new proposal, although they didn’t address the tax committee.
Team vice president Lester Bagley said the team still has to arrange its financing, and that even minor alterations to the revenue streams they got in the deal could change their financial situation.
“The last 48 hours of the session, there was an agreement by the Vikings to put in an additional 50 million dollars to bring our total financing to 477 million,” Bagley said in an interview. “That commitment was in exchange for an assurance that there would be no further impacts on stadium revenues, including taxes on stadium revenues. And again, because this legislation fundamentally alters the deal that we struck with state leaders, who have to oppose the legislation.”
Lenczewski said she hopes, nonetheless, to include it in the House omnibus tax bill.
Here are the details on the bill, which is projected to raise about $9 million the first year, and about $12 million in subsequent years.