dpshelton@blogspot.com
Eng. 201.501
Essay 2 Draft
1,157 Words
Picking on the Little Guy
Taxes are an essential part of the American economy. They provide funding to the government for vital components of everyday life; roads, schools, and fire and police stations. We rely on our elected officials to use common sense to distribute our tax money responsibly; unfortunately, this is not always the case.
In 2005 the Indianapolis Colts were seeking to increase the amount of money and coverage they received on game days. Instead they ended up extorting an entire state of taxpayers, most of whom are loyal fans of their state’s team. In September, former mayor of Indianapolis, Bart Peterson agreed to an extended lease with Colt’s president, Jim Irsay, the day the Colts were set to play the Baltimore Ravens. Mayor Peterson also agreed to start construction on the most state-of-the-art and expensive stadiums in the NFL. The new stadium was projected to cost about $720 million with the expansion of the convention center, which will be attached to Lucas Oil Stadium, to bump the cost up to a projected $900 million. At the time the city of Indianapolis had an income budget of $542,692,697 and an expenditure budget of all $542,692,697, much less than required to build one of the most sophisticated stadiums in the country (www.indy.gov).
The plan that the city council had to fund the new stadium was, surprise, a new tax. They proposed the food and beverage tax as all that was necessary to fund construction and maintain upkeep of the new stadium. The food and beverage tax is a one percent tax on any food or beverage. For consumers that mean a tax on what they eat drink at restaurants, fast food place, or at the local deli. For the owners of these restaurants and delicatessens, this means a one percent tax on any equipment or product that is necessary to prepare and sell this food. So the ingredients, the oven or fryer, the utensils to cool the food, the packaging you intend to sell the food in, any utensils that the consumer needs to eat the food with, and the actual finished product being sold all has a one percent tax on it (www.in.gov pdf).
The actual amount of money needed was too much for just one county of 876,804 people, so the city council petitioned other counties that surround Marion to pass the food and beverage tax to lighten the burden (www.city-data.com). The bill was introduced to all the surrounding countries and was successful in almost all of the potential ten counties, only failing to pass in Morgan. Some other counties and towns throughout the state have formally requested that the bill be brought before their legislature and passed in the counties and towns of Allen, Carmel, Delaware, Martinsville, and Vanderburgh. Since its passage the food and beverage tax has raised in the past four years $141.8 million which is actually above projected values and has exceeded the expectations of the local legislature in all counties it passed in except for the central county of Marion. This could be due to the fact that the food and beverage tax was added onto the already existing food and beverage tax that was proposed to pay for the now demolished Market Square Arena and the fact that the taxpayers are disturbed that the money isn’t going to pay off the $75 million dollars still owed on the RCA Dome.
Many people are feeling déjà vu with the new food and beverage tax to fund the new Lucas Oil Stadium. Conseco Fieldhouse, the home of the Indiana Pacers, in Indianapolis was built in 1999 after the Indiana Pacer basketball organization threaten to leave the state and find some other city if Indianapolis did not build them a new stadium to play in. The city government caved and spent almost $30 million to build what is now Conseco Fieldhouse. Since then the Pacers have sunk to the bottom of the basketball world, having more felony convictions that world titles. We can only wonder if the same mediocrity is destined for the Colts and Lucas Oil Stadium.
Jim Irsay probably used the same principals of intimidation that the owners of the Pacers used back in the day to extort the city into wasting valuable tax money on a stadium. Smaller venues are often marked by sports teams because they are often much more ardent to spend more money in fear that the team will leave. He and city officials had spent years negotiating terms for the creation of a new stadium. When the Capital Improvement Board lobbied the Colts to front more of the starting cost and attempted to reopen negotiations with the Colts owner Jim Irsay said that "I'm not going to renegotiate. That's the bottom line. All we did was negotiate in good faith. We've done everything we can to have a great organization. We've lived up to our part. We've exceeded our part." Irsay then said that "In other words, we'll let you know what we want, when we want it. What you signed means nothing." Under the terms of the new lease, the Colts get a hold of forty percent of all concession, merchandise, and ticket sales in the stadium. They receive all the profit from companies who want to advertise inside the stadium. On top of all that they don’t have to pay rent or hire anyone to work in the stadium. All of the concession and ticket vendor, ushers, security, and janitors are all paid for generously by the taxpayers (www.indystar.com). With all the expenses that the Capital Improvement Board stuck the taxpayers with, their deficit has ballooned to a monstrous $78 million. Rob Grand the chairman of the CIB said "We're making guesses until we have actual numbers, We're bleeding cash right now, absolutely" (www. football.ballparks.com).
The increase in the CIB’s debt adds pressure to get Lucas Oil Stadium to start making money to pay for itself. Unfortunately, the increased size and the sheer cost of the state-of-the-art facility caused the fee to increase per square foot. In the RCA Dome the cost per square foot was thirteen cents and snow in Lucas Oil Stadium the same event must pay twenty-four cents per square foot. This drastic increase in the price per square foot has some events worried that they may have to relocate to another venue to turn a profit. The IHSAA has alerted the CIB that they are considering moving the state football championships away from Lucas Oil Stadium because of the raised rates.
The idea that the food and beverage tax would ever be able to fund Lucas Oil Stadium is and has always been a fantasy. It adds pennies to every transaction and will take well over the thirty years to pay off the Lucas Oil Stadium. It is proven that increasing taxes actually decreases the revenue of the government.
"Conseco Fieldhouse." Conseco Fieldhouse. Ballparks.com, 08 Aug. 2008. Web. 14 Aug. 2009.
"Food and Beverage Tax." Indiana Department of Revenue. July 2005. Web. 14 Aug. 2009.
"Http://www.sportsbusinessdaily.com/article/129711." Sports Business Daily. Street & Smith's Sports Group, 27 Apr. 2009. Web. 14 Aug. 2009.
"Lucas Oil Stadium." Lucas Oil Stadium. Ballparks.com, 15 Sept. 2008. Web. 14 Aug. 2009.
Fish, George. "Indianapolis' Extortion Dome." Solidarity. 31 July 2008. Web. 14 Aug. 2009.
McFeely, Dan. "Lucas Oil Stadium has shown success in bookings." IndyStar.com. 13 July 2009. Web. 14 Aug. 2009.
Ruthhart, Bill. "CIB answer likely won't include Colts, Pacers." Indy.com. Star Media, 29 Apr. 2009. Web. 14 Aug. 2009.
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