That assertion that Minnesota’s cigarette taxes won’t be needed for Viking stadium financing? Well, that’s up in smoke.
A small section of the state budget forecast released Thursday says that the state is basically writing off new electronic gambling as a revenue source for the stadium for now.
“We’re assuming no growth, until we actually see it,” Minnesota Management and Budget commissioner Jim Schowalter said in an interview today.
That shortfall will leave, at least in the short term, a gap between the debt service on stadium bonds, expected to be sold next month, and the money coming into the state.
Lawmakers earmarked a new corporate tax to replace most of the faltering pulltab revenue back in May, but that’s only $20 million, far short of the $34 million a year the state expects to pay annually in debt service.
Schowalter confirmed today that smokers are going to fill that gap.
Or at least the $26.5 million in retroactive cigarette taxes they paid will. That tax was collected on smokes shipped to the state before a new $1.60 per pack increase took effect on July 1. The money was supposed to be a reserve fund for stadium bonds, but its’ going to backfill the bond payments now.
“That floor tax will be dedicated to the stadium,” Schowalter said after a House Ways and Means Committee meeting Friday on the budget forecast.
That’s not what revenue commissioner Myron Frans said back in July.
“We don’t think we’ll need them,” he told Stadium Watch.
The Department of Revenue deferred questions about the reserves to MMB today.
Schowalter says it isn’t a long-term problem and that this time, the stadium financing plan really will work out.
It’s a lot of math, but as Schowalter explains it, that $34 million of stadium debt service includes the money the state is borrowing on behalf of Minneapolis — it’s $150 million the city pledged to the stadium, on top of the state’s $348 million. But the hospitality taxes tabbed for the city share of the debt are going to the city’s Convention Center bonds right now and won’t be available until later in the decade.
Schowalter said the debt can be structured to let the state temporarily cover the bond payments without city help, even after the stadium reserve fund has been exhausted in 2016.
But that reserve fund didn’t last long. The stadium will actually open without it. The fund is projected to be drained by the end of June 2016 — about two weeks before the scheduled completion of the new Vikings stadium on July 15, 2016.