Three members of Congress have introduced a bill that would put a halt to a subsidy benefiting professional sports teams—tax-exempt municipal bonds, the Washington Post reported. Reps. Earl Blumenauer (D-Ore.), Jackie Speier (D-Calif.) and Don Beyer (D-Va.) introduced a bill they co-authored, titled the “No Tax Subsidies for Stadiums Act of 2022,” which would eliminate the subsidy once it is signed into law. Rep. Blumenauer previously introduced similar bills in past sessions of Congress. 

“There is no justification for these multibillion-dollar franchises to be eligible for tax-exempt municipal bonds,” Speier said. “This is tax dollars that could be used for any number of really important public-interest programs. Over the course of 20 years, it [represents a loss of] $4 billion — and probably much more.” 

A study published in the National Tax Journal in March 2020 estimated that the federal government had lost $4.3 billion in revenue as a result of tax-exempt municipal bonds used for stadium construction concession since 2000. It was based on a review of 57 stadiums built since 2000, of which 43 were funded, at least in part, by federal tax revenue in the form of tax-exempt municipal bonds. In their conclusion, co-authors Austin J. Drukker of the University of Arizona and Ted Gayer and Alexander K. Gold of the Brookings Institution, wrote,  “Proponents of government subsidies for sports stadiums typically justify them on the grounds that stadiums provide spillover gains to the local economy. The evidence for these spillover gains is weak. Academic studies consistently find no discernible positive relationship between sports facility construction and local economic development, income growth, or job creation.” 

They add, “The simplest and most direct way to stop the use of tax-exempt municipal bonds to finance professional sports stadiums would be to disallow the interest on such bonds from being federally exempt from income taxation or to eliminate the private payment and security tests for such bonds, both of which would eliminate the authority of state and local governments to issue federally tax-exempt governmental bonds for stadium construction. Short of that, an alternative approach would limit the federal tax subsidy by classifying stadium bonds as qualified private activity bonds, which would make them subject to a state-wide volume cap, place additional restrictions on their use, and allow financing of the bonds through taxes directed at the beneficiaries of the stadiums.” 

Rep. Speyer endorsed this view/ “We’re saying to the American taxpayer, ‘We’re going to be good stewards of your taxes and make sure that they’re being spent on important public interest programs,” she said. 

The bill, if enacted, would not apply retroactively to tax-free municipal bonds that have already been issued for construction or major renovation projects. Instead, it would apply to new bonds going forward for stadium projects in all pro sports, including the National Football League, Major League Baseball, the National Basketball Association and the National Hockey League.