(The Center Square) – As arenas, convention centers and even some hotels funded by state and local governments stand mostly empty due to the pandemic, and with revenue all but nonexistent, the burden to make the debt payments may shift straight to taxpayers.
“The individual taxpayer is always on the hook when the ambitions of local governments fail to meet expectations,” Chris Hagenow, vice president of Iowans for Tax Relief, told The Center Square.
“The financial impact of the pandemic, or any other unforeseen event, should be a reminder of the value of fiscal discipline, even when everything is going well,” Hagenow said.
Coralville city leaders put nearly $190 million in public funds into Iowa River Landing, which includes the 6,000-seat Xtream Arena, a fieldhouse, a convention center, retail and museum space, and a yet-to-open hotel, the Des Moines Register reported.
Polk County expects to lose up to $6 million this year, and $10 million next year, from lost bookings for the Hy-Vee Hall convention center and vacancies at the county-owned Hilton Hotel. Cedar Rapids owns the DoubleTree by Hilton Hotel Cedar Rapids Convention Complex and the adjacent arena.
The state spent $66 million in 2008 on the Honey Creek Resort on Rathbun Lake. Even another $33 million did nothing to improve its popularity before the pandemic. It operates in the red and remains closed on most weekdays, the Des Moines Register reported.
The taxpayer advocacy group recommends that voters remain vigilant when bond issues that support these types of projects are on the ballot. Hagenow recommends that they understand elected officials’ views of these projects when deciding on who they will support on the ballot.
He said it points to larger issues, including the proper role of government. Should governments build stadiums and arenas?
“Iowans for Tax Relief has consistently cautioned against creating new financial obligations because the local taxpayer is ultimately on the hook for these costs,” Hagenow said, “Similarly when new revenue streams like the hotel-motel tax or the local option sales tax are introduced with the intent of providing local tax relief, voters have to realize their property tax dollars are the bailout fund governments will end up turning to if anything comes up short.”