Schuette OKs school taxes for new Red Wings Arena

[Islandman]

"Last week was seen as a big deal for Detroit: For one thing, the city officially emerged from municipal bankruptcy, ending an 18-month bout of financial wrangling with itself.

On the same day, the owners of Little Caesars, Mike and Marian Ilitch, announced they would construct a new eight-story headquarters for the pizza empire in downtownnext to their Fox Theatre. The Ilitch organization said they would be only the seventh corporate headquarters to locate in Detroit since 1950.

It was an announcement meant to tie in with a new $450 million arena for the Ilitches' Detroit Red Wings to be constructed a block away. Both are expected to open around the same time in 2016-2017.

That wasn’t the only arena-related news last week.

Michigan Attorney General Bill Schuette quietly issued an opinion that said state taxes for schools can legally be used to fund the arena’s construction. The opinion came in response to a request in October from state Rep. Rose Mary Robinson [[D-Detroit), who asked if it was a constitutional use of the funds.

In her request, Robinson pointed to a section of the Michigan Constitution, which says that money from the state School Aid Fund is to be used “exclusively” for public schools and colleges in Michigan.

Some quick background: Robinson’s request stems from the structure of how the Red Wings arena will be financed. An estimated 58 percent of the cost to construct the arena will funded by public tax dollars, about $261 million.

The state is borrowing $450 million up front to support the arena’s construction. Robinson’s chief concern was that the Detroit Downtown Development Authority [[DDA), which will own the arena, will use an estimated $15 million annually in state school taxes to repay Michigan.

That will happen because, in 2012, the Michigan legislature passed legislation that allowed the DDA to divert taxes that would’ve otherwise been deposited into the state School Aid Fund, which provides financial support for K-12 public school systems in Michigan.

At the time, legislators supporting the move said the decision would only allow the DDA to continue capturing taxes to support economic development, just as it has since the 1990s.

But state officials previously told MT that, if the legislature never passed the bill, the estimated $15 million annually would’ve been deposited again into the state School Aid Fund. [[The state has said it repays schools for any lost revenue, but the fact is that $15 million had to come from somewhere, though it's unclear where.)

In his opinion released last week, Schuette said Michigan’s DDA Act historically shows that school taxes can be captured under “certain circumstances.” In the case of Detroit, school taxes are captured by the DDA before they’re deposited into the School Aid Fund. So, Schuette wrote, that means “those captured school taxes were never dedicated to the School Aid Fund.”

Robinson, as expected, wasn’t pleased. She told MLive's Emily Lawler, “Our first asset is our children, our priority is our children.”

When state lawmakers debated whether to appropriate public funds for the project, some Republican legislators argued that $15 million was a pittance sum. If it was money to be used for grand economic development, they claimed, then it was worth diverting the taxes. [[The Ilitches say the new arena will create 400 part- and full-time jobs, and the city will receive about $16 million in total income tax revenue.)

Whether you agree that public tax dollars should be used for the project, or decry the idea of subsidizing a billionaire’s arena, the fact is that schools in Michigan could use all the help they can get. Even if it is only $15 million.

For example, this past May, Michigan officials lowered revenue projections for state school taxes over the next year by nearly $80 million. This was seen as a big deal when the revised projections were released. And if facets of a recent state House plan to support road funding — by phasing out the sales tax on gasoline and replace it with an increase to fuel taxes — gains traction when lawmakers hash out a compromise this week, that could cost deplete school taxes of “hundreds of millions of dollars,” according to one study.

And while Robinson hasn’t said this outright, her point speaks to a larger concern about the current revitalization in downtown Detroit: No one questions the fact that it’s a positive sign to see young millennials moving into the city. But what will those transplants do when they have children later in life and want to send them to school — in Detroit?

"I represent Detroit, and I represent the center of Detroit, the core,” Robinson told MLive. “And our priorities are our children, schools, police protection, basic essential city services. Give us that. Take your arena ... it's just not fair." [[The DDA also for decades has captured tax dollars for economic development that otherwise would’ve flown into Detroit’s general fund, which pays for police and fire services.)

The point is this: That $15 million per year would’ve been something. Since the arena’s projected lifespan is expected to last only 48 years, perhaps that’ll be taken into consideration the next time a new one is pitched."

http://www.metrotimes.com/Blogs/arch...ed-wings-arena

[Johnnny5]

^^^ This is the type of injustice that Detroiters should be marching in the streets over! A man who is billionaire many times, owns multiple profitable professional sports teams, operates a giant restaurant empire, a casino and dozens of other businesses should not be getting a massive amount of public dollars to build a new stadium. It's even more a of injustice when money is being funneled out of education funding to pay for it.

[BankruptcyGuy]

I think what is missed by the "School Aid Fund" is that money is fungible. For the last several years, the funds in the School Aid Fund would have been woefully short. The state has had to add money from the General Fund to get a reasonable sum to schools. So if some money is "taken" from the School Aid Fund, and that fund is added to by the State [[albeit by $15MM more), it doesn't impact schools at all.

Whether projects like these should receive tax abatements is another matter. But funding it doesn't cut money from schools.

[Honky Tonk]

I think what is missed by the "School Aid Fund" is that money is fungible. For the last several years, the funds in the School Aid Fund would have been woefully short. The state has had to add money from the General Fund to get a reasonable sum to schools. So if some money is "taken" from the School Aid Fund, and that fund is added to by the State [[albeit by $15MM more), it doesn't impact schools at all.

Whether projects like these should receive tax abatements is another matter. But funding it doesn't cut money from schools.

Let's see..... General Fund.... isn't that where the money is kept from the taxes collected @ the pump that was destined for road repair? There's currently a bill to raise MI sales tax to fund road repair. That'll bring us back to dough..... Looks like we've come full circle.

[JBMcB]

As we all know, constitutions are "Living Documents." The rules are only there as long as people feel like following them. If the rules are inconvenient you can just ignore them.

[lpg]

Just another example of the financial shell game in action. Lottery was supposed add to the school fund. Gas taxes were supposed to maintain the roads. End result bad roads, underfunded schools. But a rich guy can get all the funding he needs at a moments notice.

[Gpwrangler]

Too bad they couldn't have used some of that money to secure all the schools they've abandoned. All the "for sale" signs on these now-destroyed buildings are a joke.

[compn]

lets get the legislature to place a tax on little ceasars pizzas to pay for the arena, those things [[i cant even call them pizzas) are terrible anyhow.

[Goose]

Just another example of the financial shell game in action. Lottery was supposed add to the school fund. Gas taxes were supposed to maintain the roads. End result bad roads, underfunded schools. But a rich guy can get all the funding he needs at a moments notice.

100% agree, yet it's amazing that most on the left and a large majority of the right still look to government as the first choice of solutions... the health care takeover, aka obamacare, will be a failure financially for most involved, other than the super rich or the super poor that may get some aspirin

and the tea-party's philosophy is dismissed as fanatical... the idea that not only are we Taxed Enough Already, but that these taxes are wasted and used to pad/line the pockets of the elite and to keep the power brokers in power...

sick

[Hypestyles]

There needs to be an ongoing college scholarship fund set up by Olympia for Detroit public schools students.

[SyGolden48236]

There needs to be an ongoing college scholarship fund set up by Olympia for Detroit public schools students.

Why? Why does a privately owned company need to do that? And why just for Detroit students?

Why not also for students in say Livonia, or Southfield, or Harper Woods, Birmingham, Warren, Southgate, or any other city since you're advocating spending someone else's money freely?

[Hypestyles]

Why? Why does a privately owned company need to do that? And why just for Detroit students?

Why not also for students in say Livonia, or Southfield, or Harper Woods, Birmingham, Warren, Southgate, or any other city since you're advocating spending someone else's money freely?

Reparations for the tax money siphoned to create this arena zone. Grosse Pointe kids have rich parents. Detroit's kids do not. that is why. You should contribute, too.

[SyGolden48236]

Reparations for the tax money siphoned to create this arena zone. Grosse Pointe kids have rich parents. Detroit's kids do not. that is why. You should contribute, too.

Why, pray tell, should I contribute?

Reprations?? You're comical.

[lpg]

We're back to us against them again.....

[sumas]

We're back to us against them again.....

That deserves a great big huge sigh!

[sumas]

Truthfully at the risk of alienating more forumers. I could care less about sports. Kids I care about. Diversion of funds from public eduation for some arena makes me think, why not build Matty a new bridge. Makes about as much sense.

Our schools are at bare bones funding, libraries mostly closed, only a few rec centers left' My area kids are smart. really smart but most have dificulty reading or even basic math. Not the schools fault that home life is not conducive to reading or homework. Can't even read a recipe. With funding the schools can fill a huge gap in an underpriveledged childs life.

What the hell, the haves want an arena and they'll get it too.

Guess you get what you pay for, a next generation of under class that will hate your guts while you sit munching pizza, boxed seats and surrounded by security. Take that security home with you too. You'll need it.

But you will have the pleasure of complaining about the dregs of Detroit without a care that you contributed to the neglect

[Wesley Mouch]

Truthfully at the risk of alienating more forumers. I could care less about sports. Kids I care about. Diversion of funds from public eduation for some arena makes me think, why not build Matty a new bridge. Makes about as much sense....snip...

I don't follow the Wings, but I think sports are part of the richness of life for kids. Professional sports are hardly pure in all ways, but they too do celebrate excellence in fitness, practice, skills, and sportmanship.

I followed the Wings when I was a kid. I think it was a positive in my life.

Sports today have negatives, too -- but don't toss out the baby with the bathwater. Children can be enriched by eating at McDonalds and watching the Wings. Not everything needs to be 100% good for you -- and not all good is only channelled through public education.

[sumas]

I don't follow the Wings, but I think sports are part of the richness of life for kids. Professional sports are hardly pure in all ways, but they too do celebrate excellence in fitness, practice, skills, and sportmanship.

I followed the Wings when I was a kid. I think it was a positive in my life.

Sports today have negatives, too -- but don't toss out the baby with the bathwater. Children can be enriched by eating at McDonalds and watching the Wings. Not everything needs to be 100% good for you -- and not all good is only channelled through public education.

I agree sports are great for kids most public schools no longer have gym classes. My eldest attended Chrysler in Lafayette Park and they had to choose between cultural enrichment such as plays, art and music or sports. They opted for cultural enrichment. Lots of those choices are not even choices now. Just all eliminated. Remember no librarys, no rec centers that are accessible to kids. PALS is a great program but serves a very limited group of kids. Of course if the wings want to reserve seats for area kids, provide transport and free pizza, I am all in. Throw in some skating lessons too. I am not at all dissing you personally I just want kids to have opportunity.

[sumas]

Sorry Wes I don't mean to sound grumpy [[though I am). Case in point, I am no sunshine and fuzzy kittens. The schools can't be a panacea for our area kids nor can I. So many just have no place to turn to. It breaks my heart.

I wrote a grant relating to kids activities last spring. Didn't get the grant but they had interest in my ideas so vowed to work with me for the next granting cycle. Great I thought. They said they wanted to see more of a curriculum based concept. I rewrote the grant it covered 7 months, 14 activities, two field trips and one walking tour. As presented they wanted more activities and involvement. Frankly I said fuck it. I am not a teacher nor a babysitter. Never bothered to submit. I can only imagine how teachers must feel. Most of what I do is self funded so pretty sure I can figure out ways to work with kids without that 5K. Money helps but the strings were wierd. Again for 5K I have no plans to be a summer school'

[Johnnny5]

There needs to be an ongoing college scholarship fund set up by Olympia for Detroit public schools students.

Why? Why does a privately owned company need to do that? And why just for Detroit students?

Why not also for students in say Livonia, or Southfield, or Harper Woods, Birmingham, Warren, Southgate, or any other city since you're advocating spending someone else's money freely?

I admit it sounds like a dumb idea, but then again so does the idea of the public paying for the stadium of a privately owned sports team.

[Kevgoblue]

I don't follow the Wings, but I think sports are part of the richness of life for kids. Professional sports are hardly pure in all ways, but they too do celebrate excellence in fitness, practice, skills, and sportmanship.

Agreed.
Problem is nowadays the cost associated with attending a professional sporting event makes going to the games a financial impossibility for so many kids [[parents).

So, in exchange for using public funding for his private stadium, do you think Mr Illitch might consider reserving a certain percentage of reduced price tickets to the games for low and moderate income fans? I didn't think so either.

[SyGolden48236]

Agreed.
Problem is nowadays the cost associated with attending a professional sporting event makes going to the games a financial impossibility for so many kids [[parents).

So, in exchange for using public funding for his private stadium, do you think Mr Illitch might consider reserving a certain percentage of reduced price tickets to the games for low and moderate income fans? I didn't think so either.

Tax money is often used to promote business interests in part for the spin off economic activity that certain types of business foster.

Using your logic one could say that GM should make a certain amount of Cadillacs available at reduced prices for low income people since tax money helped bail GM out.

Ridiculous!

[CrashDummy]

So, in exchange for using public funding for his private stadium, do you think Mr Illitch might consider reserving a certain percentage of reduced price tickets to the games for low and moderate income fans? I didn't think so either.

I believe they already do, as do the other local sports teams and universities. I have been to several games using discounted tickets provided to school and scouting organizations. I would contact the public relations department if you are truly interested.