Robbing From Money For Schools To Give Welfare To Stadium-Building Bajillionaires
Taxes for Michigan schools are being siphoned off -- turned into welfare for the wildly wealthy, as they are used to fund the construction of a new sports arena.
As @AliceDreger tweeted:
@AliceDreger
Yup, in Michigan we use school taxes to pay for pro sports arenas.
Ryan Felton writes in Metro Times/Detroit that taxes for the schools are being siphoned off as wel:
The owners of Little Caesars, Mike and Marian Ilitch, announced they would construct a new eight-story headquarters for the pizza empire in downtown next 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.
I love the terminology: that the funds can be "captured" -- kind of like limping gazelle is by a hungry hyena.
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.)
If stadiums are such a great deal, they can be funded privately.
But -- whoops -- they're typically only a great deal for those who own the team.
Here's a CBC report by Armina Ligaya:
The vast majority of studies done on the financial benefits of new sporting facilities by researchers not connected to any sport, league, or team have not found any economic boost for cities, experts say."Most of the independent research can't find any economic impact associated with either new arenas, new stadiums, or new franchises or large events," said Victor Matheson, a professor of economics at the College of the Holy Cross in Worcester, Ma., who has been researching the economics of sport for more than a decade.
"So, building a new arena doesn't seem to have any effect on a city's employment, per capita income, hotel occupancy rates, [or] taxable sales."
Gregg Easterbrook in The Atlantic on how the NFL fleeces taxpayers:
Pro-football coaches talk about accountability and self-reliance, yet pro-football owners routinely binge on giveaways and handouts. A year after Hurricane Katrina hit New Orleans, the Saints resumed hosting NFL games: justifiably, a national feel-good story. The finances were another matter. Taxpayers have, in stages, provided about $1 billion to build and later renovate what is now known as the Mercedes-Benz Superdome. (All monetary figures in this article have been converted to 2013 dollars.)The Saints' owner, Tom Benson, whose net worth Forbes estimates at $1.2 billion, keeps nearly all revenue from ticket sales, concessions, parking, and broadcast rights. Taxpayers even footed the bill for the addition of leather stadium seats with cup holders to cradle the drinks they are charged for at concession stands. And corporate welfare for the Saints doesn't stop at stadium construction and renovation costs.
Though Louisiana Governor Bobby Jindal claims to be an anti-spending conservative, each year the state of Louisiana forcibly extracts up to $6 million from its residents' pockets and gives the cash to Benson as an "inducement payment"--the actual term used--to keep Benson from developing a wandering eye.
So yes, great deal...a fantabulous deal -- for Mike Ilitch.








The latest thing these days is cities spending millions on stadiums for minor league baseball. Yes, minor league baseball -- the kind that often draws less than 1,000 fans per game. The stadiums are mini copies of the latest in major league stadiums, with all of the little features that are supposed to give it the "old school" ballpark feel (minus the old-school wooden bleachers, natch). Lots of minor league teams are moving around as cities offer them incentives the likes of which minor league team owners have never seen before. It's a crazy fad. The boom can't possibly last and one wonders what happens when it goes bust.
Another trend in baseball is that major league teams want their top-level (AAA) minor league team located in the same metro area, to make it easier to move players back and forth between the major league and minor league rosters. So now, in addition to the major league stadium, the city and the region are on the hook for a minor league stadium. The irony in all of this is that teams may threaten to move in order to get more incentives, but with there now being 30 major league teams and MLB talking about expansion, there's really nowhere for teams to move to.
Cousin Dave at May 2, 2016 6:46 AM
Robinson, as expected, wasn't pleased. She told MLive's Emily Lawler, "Our first asset is our children, our priority is our children."
Deer Representative Robinson,
Have you actually read the contract between the school district and the teachers union? if you had, you'd know that the children are at best 4th or 5th on their list.
Also, how much money did you take from said teacher's union for all of your election cycles? I'm not saying you're wrong about this, but you're also "capturing" tax money meant for education.
As for stadiums, ask the City and County of St. Louis, they're still making payments on bonds that funded the domed stadium in downtown until some time in 2022.
A domed stadium that currently has no anchor tenant, courtesy of the Los Angeles Rams. After a bit of digging, they have an event this year. In December. Dirt Nationals.
Yeah, that's the ticket.
I R A Darth Aggie at May 2, 2016 7:09 AM
Welcome to Michigan politics.
You could send taxpayer money (city, state and Federal) to Detroit through a 48" water main, at high pressure, and it would never be enough to satisfy the city's graft machine. Detroit is ankle-deep in projects which absorb public money like a giant sponge, but never deliver any of the positive effects so confidently-promised when ground was broken.
Detroit has a wildy-asinine monorail system (the People Mover) that goes nowhere anyone wants to go, carrying a tiny fraction of its possible number of riders, at vast cost in annual subsidy - and yet the city is busy tearing up the center of Woodward Avenue to install a 'light rail' system. Which will go to different places that nobody wants to go, at yet-further cost in annual subsidies to run empty cars back and forth.
The Wayne County Jail project in downtown Detroit sits unfinished, after spending $200 million of state, Federal and bondholders' money on a project so riddled with cost overruns that everyone now agrees it cannot possibly be finished to a useable condition.
And I could go on. And on.
These projects are not meant to provide public benefits or encourage economic growth. Only a hopeless naïf even imagines that anymore. These projects are intended to a) provide short-term union jobs and b) funnel money into the 1,001 corrupt channels down which money always disappears in Detroit. They have no other real purpose. They are put together to benefit a loose, interconnected coalition of elected and non-elected political figures, contractors and investors, all of whom seem to walk away with full pockets regardless of the result of the project. The Wayne County Jail is a prime example - the actual project is a laughable failure, unfinished and unfinishable. The county is on the hook to the bondholders. But that $200 million in cash has all soaked away into the pockets of contractors, consultants, landowners, and 1000 other providers of goods and services - and some of it inevitably ends up in the pockets of local, state and federal officials, both elected and unelected
A commenter above mentioned the Detroit Public Schools principal recently indicted by the feds for a supplies corruption scheme of epic proportions. This woman, Kenyetta Wilbourn Snapp, took some $60,000 in kickbacks from DPS suppliers for steering no-bid contracts. And she wasn't discreet about it - for a while, she drove a new Maserati coupe with the Michigan vanity tag 'GUCCI', and lived in a riverfront high-rise condo reported to rent for $3500 per month - on a salary around $80,000 pa.
And she wasn't the worst - one of her colleagues, named Clara Flowers' was just charged in the same scheme for taking $324,000 in kickbacks.
This is business-as-usual in Detroit, and raises no eyebrows, particularly. Many Detroit residents see this sort of thing as nothing more than a slightly-different economic model, that puts money in the pockets of many Detroit residents - sure, maybe money that was obtained illegally, or money spent on a wasteful and economically-foolish white-elephant, but it ended up doing some good, so what's the issue? They consider it no more than their due.
So long as this attitude pervades all levels of state and city government, as well as a great majority of the population, nothing will change in Detroit. This graft is mixed into every yard of no-bid, union-installed concrete in the city. As we see in the recent case of State Senator Virgil Smith, no behavior is too outrageous on the part of an elected official, so long as he keeps the pork barrel well-filled.
llater,
llamas
llamas at May 2, 2016 11:10 AM
The way I see it, the legislature is transferring money from one slush fund to another.
Apparently the construction unions screamed louder than the teachers union.
Isab at May 2, 2016 11:22 AM
What Isab said. It is quite clear that education doesn't need more money. What they need is discipline and accountability (for both students and teachers/administration). But these projects are a waste of money too. Put the money in a big pile and set it on fire. Same difference. Meh.
Ben at May 2, 2016 12:14 PM
How many taxes and bond schemes have been passed in the last decade with financing education as their stated goal? And why did they need to be sold that way? Because the education money had been spent on something else.
How many state lotteries were sold to the voters as education lotteries? Of course, once passed, an amount equal to education's lottery proceeds was diverted from the original education budget to new projects. So, education didn't actually gain anything.
Every politician who complains about his/her opponent's party's spending asks, "Won't somebody please think of the children?"
Conan the Grammarian at May 2, 2016 1:32 PM
llamas reminds us of what an utter hellhole Detroit is.
If you need another name, I give you Kwame Kilpatrick. And I'm sorry, my city sent him to you by way of Florida A&M University...
Ordinarily, I would urge tax payers to pay their taxes, but in Detroit, well, no. I can't blame them for not paying. Better to keep the money in your own pocket and dare the city to do something about it.
I R A Darth Aggie at May 2, 2016 6:22 PM
Detroit Public Schools teachers are now in the second day of a 'sick-out', protesting the fact that DPS is - once again - out of money and will not have the funds to pay teachers after June 1st.
DPS has been on permanent life support for the best part of a decade now. Despite a succession of state-appointed emergency managers and the bankruptcy of the very city itself, DPS has been institutionally-unable to get and keep fiscal control of its operations, and it stumbles from one bail-out plan to another, each of which is promised to put the system back on a sound financial footing and restore fiscal control - and each of which never does.
And the reason is always the same - the money just - disappears - into a rabbit-warren of expenditures and accounts that have nothing much to do with education. Despite the ever-shrinking population of the city, the administration of DPS remains vast (all union employees, of course) and the number of places where DPS funds can be diverted to do political favors, buy influence or just plain steal are virtually without-number. As we see with 13 DPS principals now under Federal indictment for a multi-year, multi-million dollar bribery and kickback scheme.
A couple years ago, the then-emergency-manager, Robert Bobb, decided to try and get a handle on the persistent stories of how many 'ghost' employees DPS had. He announced that, on one bi-weekly payday, paychecks would not be mailed as usual - you had to show up, with ID, and sign for your paycheck.
Take a guess how many non-existent employees there turned out to be? Answers on a postcard, and no Googling.
Former mayor Kilpatrick, now a long-stay guest at the Federal Inn and Suites, is a perfect example of the kind of group graft I described above. He is the scion of a dynasty of Detroit movers and shakers - his mother was a state and US Representative, his father was a state representative, and city and state government and just littered with aunts and cousins. A lack of ability at anything but football was no bar to his stately progress through the state and city government, until he landed the mayor's job as some sort of birthright. And in that place, he ensured that the city's finances were run for the continuing benefit of himself, his family, the other members of the group, his mistress(es) and whoever was willing to pay the ante (to him and the group) to join.
These were the halcyon days when a laid-off police sergeant who was working as an admin at the Detroit Free Press woke up one day to find herself the police chief (not quite that simple, you understand, but you get the idea). But why would you be surprised? After all, she was married to the man who had been Wayne County Sheriff, then Detroit police chief, then Detroit Chief Executive. Why not? After all, passing around all of the major positions in city and county government among the same small group of players, and their wives, and their children, is a grand old Detroit tradition. Like Sam Rothstein in 'Casino', they all swap or pass down their state and city jobs every year or two. The Levins, the Dingells, the Conyers-es, the Kilpatricks, the Vernon Smiths (pere, fils etc) Ficano, Napoleon, Evans, the list goes on. And somehow, they all seem to get richer with every move.
You can't fix this sort of thing. It's built into the roots of how Detroit, and Michigan, operates. No power on Earth can ever eliminate it, because the whole city works this way. Nobody has clean hands, and anyone who comes in with clean hands either learns to get them dirty, or finds themselves sitting by the side of 8-Mile Road with a headache and no clear idea of what just happened to them, except that they're not doing, whatever it was they were doing before.
llater,
llamas
llamas at May 3, 2016 6:45 AM
Mmmm.
I can smell the kickbacks from halfway across the continent!
Gog_Magog_Carpet_Reclaimers at May 3, 2016 11:48 AM
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