Posts Tagged Mike White

Do Taxpayers of Cleveland & Cuyahoga Have to Always Carry the Cost of Institutions that Serve a Much Wider Area of Northeast Ohio?

May 6, 2010… I read in the New York Times Friday that plans are being formulated to redo Progressive Field. Who knew?

A Gateway official says, however, that there is no big redo coming. Further, at this point, both teams leasing sports facilities are responsible for capital improvements.

But don’t you know that it is coming: We need a new stadium! The Indians might leave town! What we’ve heard before we will hear again. It’s only a matter of time.

It does bring up the question of how Cleveland and Cuyahoga County can continue to afford to build and support major institutions that serve a larger geographic area. Not only sports but cultural.

It does seem past the time for thinking about how we preserve the many facilities, institutions and infrastructure assets of Cleveland. The city is rich in major sports and cultural institutions, relics of a wealthier era. How can they be preserved? Who will pay for them?

Most of the actual institutions servicing Northeastern Ohio residents physically are in Cleveland or Cuyahoga County. Does that mean only those residents enjoy those venues? Of course not.

Progressive Field, Quicken Arena, Browns Stadium, Playhouse Square’s stages (Allen, Ohio, State, Palace theaters), the Cleveland Art Museum, Severance Hall and the Cleveland Orchestra. Even the highly subsidized downtown assets of Cleveland. These are places that serve a wider area of northeast Ohio, not just Cleveland or Cuyahoga residents.

But the bill to pay for these important institutions seems to fall, at least the public portion, most heavily upon Cleveland and Cuyahoga taxpayers. Every day in almost every way. And, unfortunately, they are regressive sales taxes weighing heavily on lower and middle income people. None are progressive taxes. Thanks to people like Tim Hagan and Mike White, George Voinovich and George Forbes.

In the latest County Auditor reports we get an idea of the tax burden here:

- The Medical Mart/Convention Center – Cuyahoga taxpayers have contributed via the quarter percent sale tax hike – $94,379,438.38 since only January 2008. Cuyahoga residents will be paying this tax for 20 years.

- Browns Stadium – Cuyahoga taxpayers have contributed via various alcohol sales taxes – $64,609,806.86 since August 2005. The tax previously amounted to some $266 million to help pay for some of Gateway’s costs at the baseball and basketball facilities. The tax was levied for 15 years for Gateway and 10 more years for the football stadium, taking us to 2015. Hopefully, not to be renewed.

- The Arts & Culture tax – Cuyahoga taxpayers have been paying this tax on cigarettes – $60,724,894.40 – Cuyahoga has been paying this tax since February 2007. It’s a tax that I believe will be extended on and on.

That adds up to some $220 million in taxes (not counting the $266 million for Gateway) on Cuyahoga taxpayers with tens of millions more to be collected before these taxes run out.

These taxes will continue for many years.

Cleveland and Cuyahoga County are both losing population. That means there are fewer people paying these taxes.

We see the effect it has had on RTA. The transit system depends also on the shrinking sales tax, one percent of the 7.75 sales tax, highest of any county in Ohio. Fewer people mean less purchasing thus less sales tax revenue. Population losses and higher percentages of poor people suggest further erosion of sales tax revenue.

The burden of these seemingly small taxes is heavy. They go from taxes on almost all alcoholic drinks, cigarettes, to parking and other revenue, such as the city’s parking revenue.

The latest tax increase county taxpayers are enduring is the added sales tax of one-quarter percent that raises some $40 million a year for a convention center and medical mart. These facilities serve far more than the people of Cleveland or Cuyahoga County. Why should the burden be limited to only Cuyahoga taxpayers?

In addition, almost all of these publicly subsidized institutions pay no property taxes, leaving the costs of fire, police, school, roads and many other services funded by property taxes. Home and commercial property owners pay more in higher property taxes. And tax abatements – which essentially go to higher income housing – to new and renewed housing also eats into revenue sources

But why does Cleveland have to pay the entire public cost of the Cleveland Browns playing field? Why do Cuyahoga County taxpayers have to pay essentially the entire cost of the playgrounds of the Cleveland Cavaliers and Cleveland Indians?

Most of the residents can’t even afford to attend these high-priced events.

The local taxpayers can no longer afford the many publicly-dependent institutions that provide entertainment for a much wider – and much wealthier – audience than the people of Cleveland and Cuyahoga County.

This is a problem of the entire northeast Ohio area, its residents and its taxing structure. The financial burden then should be shared more widely.

We hear a lot of talk about regionalism. This could be a most rewarding form of regionalism.

Why do Cuyahoga County residents alone have to pay for the culture tax that provides funds for some of our major (orchestra, museum) cultural institutions and many smaller arts and culture institutions?

The time is coming – really it has passed – when all the institutions this once wealthy city enjoyed and afforded can be supported by a shrinking and far less wealthy population.

We’re running out of the resources to finance what we have. Too institutionally rich; too economically deprived.

Now is the time to let the people of Lake, Summit, Medina, Lorain, Geauga know that they need to share in the burden of the cost of Cleveland and the treasurer of Cleveland and Cuyahoga County that they enjoy. Of course, some of the same type institutions in outlying areas should share in the wider financing method, whatever that becomes.

It’s time to think about a more regional tax approach to service the wealth of institutions in our communities. It ought to start with capturing taxes on a progressive basis from the beginning.

It’s a matter of fairness. The tax burden must be widened to a larger pool. It should also go where the money is.

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Gateway Costs Taxpayers $100 Million Plus

February 6, 2010…  Taxpayers continue to pay dearly for the run-over costs from Gateway. Cuyahoga County sent a check of $2,493,426.93 but that was only a small portion of tax funds that now total far more than $100 million paid for bond borrowings in the 1990s.

Payments last year put the cost over $100 million; $9.7 million payment was made this January.

Similar January payments will continue annually through 2023. Go Cavs!

Dan Gilbert, Cavaliers owner, is one of the beneficiaries of this tax subsidy. You can thank Tim Hagan and Mike White mostly for this heavy subsidization of Gateway.

The full payment was $9,787,701.05.

In addition to the $2.49 million check from the County another $7.29 million came from other public sources. It includes millions of City of Cleveland tax dollars via the admissions tax and some $3 million from County bed taxes. (In this case, the bed taxes for two years were allocated in 2010.) A small part of the cost results from consultant fees.

The accounting calls for a portion of admission taxes from Quicken Arena – instead of going to the money-strapped city – to be used to pay for these bonds. Cuyahoga County originally issued bonds of $75 million and $45 million in the mid 1990s for the Gateway project. This was in addition to the sin tax, which brought in some $230 million for Gateway.

The Gateway project funding formula requires certain admission tax receipts at Quicken Arena to be used for the bond payments. The share varies from five-eighths to 25 percent of the admission taxes from ticket sales to be used to pay bondholders.

What this dramatically reveals is the huge money-maker the arena is for Gilbert.

Here are the actual figures as given by documents from the County Auditor’s office.

GATEWAY ARENA PROJECT FUNDING 2009

DATE AMOUNT FUNDING SOURCE FROM GATEWAY TOTAL 2004B Bonds Int Invoice $ Amt:

Jan 01 2009 ~ Beginning Balance 1/1/2008 $41,533,218.25.

Jan 30 2009 $84,383.28 25% of admission tax for “events” for Dec. 2008 $41,617,601.53

Jan 30 2009 $464,189.81 5/8ths of Games admission tax for Dec. 2008 $42,081,791.34.

Feb 03 2009 $1,425,101.00 Annual Incremental Bed Tax Payment – 2008 $43,506,892.34.

Feb 28 2009 $54,624.58 25% of admission tax for “events” for Jan. 2009 $43,561,516.92.

Feb 28 2009 $416,958.84 5/8ths of Games admission tax for Jan. 2009 $43,978,475.76

Mar 28 2009 $21,765.17 25% of admission tax for “events” for Feb. 2009 $44,000,240.93.

Mar 28 2009 $353,296.22 5/8ths of Games admission tax for Feb. 2009 $44,353,537.15.

Apr 28 2009 $193,366.67 25% of admission tax for “events” for Mar. 2009 $44,546,903.82.

Apr 28 2009 $418,900.83 5/8ths of Games admission tax for Mar. 2009 $44,965,804.65.

May 31 2009 $64,455.56 25% of admission tax for “events” for Apr. 2009 $45,030,260.21.

May 31 2009 $698,168.05 5/8ths of Games admission tax for Apr. 2009 $45,728,428.26.

Jun 30 2009 $66,891.90 25% of admission tax for “events” for May. 2009 $45,795,320.16.

Jun 30 2009 $536,646.26 5/8ths of Games admission tax for May. 2009 $46,331,966.42.

Jul 30 2009 $0.00 25% of admission tax for “events” for Jun. 2009 $46,331,966.42.

Jul 30 2009 $0.00 5/8ths of Games admission tax for Jun. 2009 $46,331,966.42.

Aug 29 2009 $0.00 25% of admission tax for “events” for Jul. 2009 $46,331,966.42.

Aug 29 2009 $0.00 5/8ths of Games admission tax for Jul. 2009 $46,331,966.42.

Sep 30 2009 $41,775.04 25% of admission tax for “events” for Aug. 2009 $46,373,741.46.

Nov 25 2009 $1,650,302.00 Annual Incremental Bed Tax Payment 2009 $48,024,043.46

Oct 30 2009 $17,949.30 25% of admission tax for “events” for Sep. 2009 $48,041,992.

Nov 30 2009 $69,908.17 25% of admission tax for “events” for Sep. 2009 $48,111,900.93.

Nov 30 2009 $323,458.96 5/8ths of Games admission tax for Oct. 2009 $48,435,359.89.

Dec 30 2009 $60,293.62 25% of admission tax for “events” for Nov. 2009 $48,495,653.51.

Dec 30 2009 $416,172.13 5/8ths of Games admission tax for Nov. 2009 $48,911,825.64

$7,378,607.39 $7,378,607.39

2009 Collections

Admissions (Games/Events) Tax $4,303,204.39 Chg From Prev. Yr % Change

Excess Bed Tax from CVB $3,075,403.00 $952,916.57 22.1%

Total Revenue Collections $7,378,607.39 $3,075,403.00 100.0%

The document below shows the principal and interest payment due this year with a total of $9.7 million due. The amount shown as from “StarOhio” is the result of the transfer of funds from the admission taxes and bed taxes. See document:

GATEWAY-Jan 10

Cuyahoga County Pledge Fund

Calculation of Funding required for 2010 in Gateway/Pledge Fund

Monthly interest on Series 2004B (floating rate @ 3.0459%) $4,353.10 per mo.x 12 = $52,237.19

“Bank Bond” interest @ 5.25% $76,496.88 per mo.x 12 = $917,962.50

(interest due 1st business day each month)

Interest on Series 1992A $1,509,375 x 2 = $3,018,750.00

(interest paid June 1 and Dec. 1)

Interest on Series 1994 $889,932.50 (June) $804,856.25 (Dec.) = $1,694,788.75

(interest paid June 1 and Dec. 1)

Interest on Series 2004A $68,725.00 (June) $36,125.00(Dec.) = $104,850.00

(interest paid June 1 and Dec. 1)

Principal due June 1 on Series 1994 bonds $2,315,000.00

Principal due June 1 on Series 2004A bonds $1,630,000.00

Wachovia Bank fees Calculated @ 90 bp x $1,715,000 + $19,734.25 $15,612.61

(1,715,000 x35/365 days interest @12%)

(paid quarterly Jan. Apr. Jul. Oct. 15th)

Remarketing Agent fees = $30,000.00

(paid quarterly Mar. Jun. Sep. Dec. 15th)

Rating Agent fees = $8,500.00

(paid annually in 4th quarter)

Total Interest $5,788,588.44

Total Principal $3,945,000.00

Total fees $54,112.61

Jan. 15, 2010 Grand total due = $9,787,701.05

137402 Jan. 7, 2010 Balance in StarOhio = ($7,294,274.12)

Jan. 15, 2010 Additional amount required = $2,493,426.93

That final figure is the amount of the check issued on Jan. 15 by Cuyahoga County from its general fund.

Only 13 more years to go!

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