Monday, December 7, 2009

When Will Convention Center Supporters Abandon the Misleading Claim That Only Tourists Will Pay for It?

Posted By on Mon, Dec 7, 2009 at 4:09 PM

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Nashville Convention & Visitors Bureau head Butch Spyridon boasted recently that convention center proponents "have consistently provided fair and accurate information" in their advocacy of the Music City Center project. But how do we reconcile Spyridon's claim with Mayor Karl Dean's assertion at last Thursday's unveiling of the financing package that the new facility will be "paid for solely by visitors taxes and fees"?

This assertion is in one sense seriously misleading, and in another factually inaccurate. It's misleading because paying for the MCC will compel the city to find new funding for existing obligations that aren't going away. As Nate Rau reported in The Tennessean over the weekend, a large chunk of the tourist taxes that will go to service convention center debt--$14 million--is currently funding other things in the city budget, and for the most part these are not expenditures that can simply be eliminated. The biggest chunk ($7.4 million) is a Predators subsidy that the city is contractually obligated to pay. Another large piece ($2.8 million) is a public transit subsidy that this mayor is unlikely to dissolve, and there are other untouchables as well, such as police overtime for special events.

Asked about this little $14 million-per-year hiccup by Pat Nolan on NewsChannel 5's Inside Politics last weekend, Metro finance director Rich Riebeling admitted that the city is "going to have to find another source to finance those projects." When Nolan pressed him on how this will play out in next year's city budget, Riebeling said with a wry smile that "we've got a long time before we start the budget process." Clearly the administration is hoping that taxpayers won't grasp the cause-and-effect link between convention center approval now and costly budget maneuvers later.

Beyond the misleading aspect just described, the claim that tourists alone will pay for the convention center is patently false because the revenue sources we like to label as "tourist taxes" are also paid by locals. Granted, visitors will pay most, but local individuals and businesses do book and pay for hotel rooms and rental cars--the things being taxed to pay for MCC. Locals will spend dollars at a new convention center and accompanying hotel, where sales taxes are being redirected into paying MCC debt. And the so-called tourist development zone, which will generate funds for MCC from incremental sales tax growth that outpaces the county as a whole, will inevitably funnel money from locals spending retail dollars within the zone.

Yes, visitors will fork up most of the cost, but between the displaced $14 million that must now be found elsewhere and the non-trivial contributions of locals to the "tourist" revenue streams, it's evident that Nashville taxpayers will be on the hook for millions of dollars per year to get the new center built and running. That fact by itself argues neither for nor against the project on its merits. After all, if a new convention center is worth doing for the city's economy, then perhaps it deserves ongoing taxpayer support.

A forthright case for a new convention center would be built on a premise of taxpayer support rather than a transparently misleading denial of taxpayer obligation. Sadly, MCC advocates apparently don't believe they can prevail through honest argument and arithmetic.

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