F1 Subsidy - Now You See It, Now You Don't! The Statesman twittered, "NO TAXES FROM AUSTIN!" and Wells Dunbar at the Austin Chronicle tweeted it was "a great sounding F1 agreement." We're off the hook, it seems. We're not investing $40 million of local public monies into the Formula One race after all, right?
"Nothing up my sleeve...look! No subsidies!" is the subtext to Mayor Pro Tem Martinez' FaceBook announcement Thursday afternoon. "No Austin taxes at all will be used, leveraged, borrowed….what ever. It’s all private funding. But we still get the huge benefit of the sales tax from the site."
Wow! OUR HERO! Right?
Hold the parade..."it's all private funding"??? NOT so much. There's still the little matter of the state coughing up $250 million, and we, in Austin, have the responsibility and the power to stop that.
Us Austinites, along with the rest of our fellow Texans, fed the Major Events Trust Fund (METF) trough that almost got re-routed back into the general fund at the end of the regular legislative session - thanks, ironically, to Sen. Watson who lined up right behind Rick Perry to bring us F1 in the first place. Our money is in that pot and could be used for something else, like schools or healthcare, as was discussed on the Senate floor May 23, IF, in the special session-education budget conference committee happening this week, someone puts that on the table again.
What Does 25 Million of Our Tax Dollars Pay For?
Remember when the Comptroller's office once said this money would not go to the promoter, but to the local entity to reimburse it for costs? Well, they did. Then, we found out that's not true (*gasp...they lied!*). It is, in fact, planned to go to the promoter to "pay the sanctioning fee London-based Formula One Group charges for the privilege of hosting the first of 10 annual F1 races planned for Austin beginning in 2012.”
It's going to Bernie Ecclestone, one of the richest men in the world that runs one of the most profitable entities on the planet.
We Get Nothing Now Via the METF
There are still costs to make this thing happen that F1 expects us to pay for - things normally these METF funds pay for - and we won't get any of the METF dollars from F1 since it all goes to their sanctioning fee. We will have to invest local public monies. Martinez said, "no Austin taxes at all will be used"...yet Austin taxpayer dollars will be spent (besides our portion already paid into the METF and the $13.5 million for water/wastewater lines out to the track). Disingenuity is not exactly a "heroic" trait.
There's roads (construction then REconstruction after getting torn up by 100,000+ vehicles), police, water, etc. We haven't determined them all yet. We haven't seen the contracts. We haven't seen the studies. We haven't seen the analyses. There aren't any to see, Assistant City Manager Sue Edwards confirmed last week. Last fall, F1 representative Richard Suttle promised Del Valle residents they'd pay for several impact studies for them - on which he has not delivered, much less mentioned again.
The Mayor tried to tell us we won't have to budget for it--but how we going to pay for the supporting costs for the first race, or any subsequent race if we're no longer eligible for any of that state pot?
$4 million being off the table changes nothing about how we still aren't anywhere near ready to vote on whether we should be on the hook for these costs...on whether we should unlock the METF floodgates from the state. How will Austin justify it to the rest of Texas?
Besides the fact that the METF is an incentive fund -- but they're already here...building out the track right now.
Texans Who Go To F1 Will Pay For It Twice
This money was allocated to the METF and it can be re-allocated right back into something more worthy than providing welfare to a few very rich international folks to entertain other rich folks. Of course, what's not being mentioned is that the majority of folks coming to the races will be Texans - the ones that don't have to spend gobs of money to travel here (and aren't likely to spend $1,500 each person/day as the Comptroller "predicts"). The trend for F1 in less exotic spots like Great Britain is that only a handful of spectators come from out of country.
So you like Formula One racing? Great. While I'm a little "NIMBY" myself on the matter (it will be a nightmare in terms of numbers, traffic, public safety, environmental hazards/non-attainment, lack of water resources, etc--for a full month, not just 3 days a year, as 1000s from the teams are here prior preparing), just realize that your taxes are subsidizing it even before you buy a ticket. Then most of the tax from what you spend while in Austin will go back into the fund, to go back to F1 - not the local entity. We merely get any leftover, if there is any.
This is not a deal to tax 100,000-300,000 out-of-state visitors -- for 'free money,' this amounts to making Texas race fans pay twice for the "privilege" of having it in their backyard. A vicious cycle considering there's no need to offer welfare to some of the richest people in the world at all. You're already stuffing their wallets, why do it twice?
Petra Ecclestone, daughter of the F1 magnet, is buying the most expensive mansion in the United States as a second home.
Formula One Updates tweets: "Ferrari have extended their contract with Marlboro which is set to be worth $480,000,000 in 3 years."
These people and their sponsors are rolling in it. Why are we scraping the bottom of the Texas barrel to help them make more money? Is it because F1 is costing more every year and making less which means Petra might have to downgrade to the 2nd most expensive home in the U.S.? Which also means we aren't going to see the local riches we're being promised. So we have to double-question the trade-off in costs - which we don't know yet.
They suggested in their commercial that one event will generate $5 BILLION; that the local economy is supposed to reap $400 million: they said 8% was our portion of their take, which would be $5B. But listen closely to the commercial. It's double-speak. It seems more like they will make $400M (a still-inflated, but more reasonable, figure), so that we get $32 million--but what are our costs? No event in the country has ever generated $5 billion. Ask Jerry Jones.
North Texas cities brought in paltry numbers during last year's Super Bowl. Comptroller projections were $31.2 million...but it looks like they brought in less than half that, depending on which source you use and whether they isolated taxes from just game goers or not. Some cities saw no increase in sales tax revenue from January to February: game month. Granted, ice and snow storms hurt attendance and sales, and perhaps F1 will bring a few more people with fatter wallets, but $5B?
We simply don't have the capacity to support that many people or sell that much stuff (Dallas, maybe: see #7), whether we're talking $5B or $400M. We have no 5 star hotels or restaurants. We don't even have near enough high class call girls that will be in demand (of course, we can't tax that), much less enough limos for hire.
Austin's "cool" but not "fa-fa-shi-shi." We're "weird;" not "money."
Welfare Reform Now! (For the Rich)
What do our Mayor, Mayor Pro Tem and Councilmember Shade have in common with Governor Perry? They're all very much in support of subsidizing F1 however they possibly can...even if it's "only" locking the state into doling out $25 million/year -of our money- for 10 years.
Our Guvnah told a crowd recently in New York City ("NYC?"), as he wrote in his book, the federal government "spends too much." Meanwhile, he was the first to promote F1 subsidies. The trumpeting trio on Council are a bit schizophrenic as well...Mayor Leff says we gotta "tighten our belts" and Shade's all "meat and potatoes," but playing host to a luxury sporting event? No prob.
What's in it for Martinez to play "hero"? $25,000 at least for his next run. Shade got that this run-off just from Suttle's firm, plus some, as we don't know what businesses -under individual names- contributed that will directly profit from F1. Nor do we know who the private investors are who may have also (33% of her contributions were from out of town) - more information we lack to make an informed decision next week.
We Can't Vote This Thursday
We can't vote on their application ("accept" it, according to statute) prior to one year before the race is scheduled. While June 17, 2012 has been penciled in by Full Throttle Productions/F1, it has not been confirmed by the The Federation Internationale de l’Automobile who is the governing body for F1. First Ecclestone pipes in and then the World Motor Sports Council votes to ratify the entire year's calendar. If ratified, the date becomes official. This vote is not scheduled to take place until the "the September or December WMSC meeting."
Todd Wroblewski explains in a letter to council: "The date of the race is significant not only to the application, it is also the key to determining the economic impact of the race. The statute requires the comptroller to determine the incremental tax receipts 'for a one year period that begins two months before the date on which the race will begin.' If the date of the race changes, the economic impact study would have to be redone if the statute is to be followed."
Also according to the statute, we have until 90 days prior (perhaps March, 2012) to decide if we want to buy in...and it's still "buying in" no matter how you look at it. We can wait, and actually HAVE to wait, several months before deciding. Just because F1's in a hurry doesn't mean we are.
Survival of the Richest!
Spending $40M to make $250M? A no brainer! These F1 guys are no dummies.
It became too politically hot for them to continue to try and pressure Austin into picking up their 'privilege fee' tab. It helped that activists and the Tovo campaign helped bring the issue to light, but we still have to sign off to unlock those state funds.
It's up to us in Austin to save Texas from itself.
PS: VOTE SATURDAY! Call 238-VOTE, option 2, to find out your polling place.
