(Reuters) - Wisconsin Governor Scott Walker on Tuesday proposed a plan that would help fund a new arena for the National Basketball Association's Milwaukee Bucks by tapping into expected growth in players' income tax payments.
The Republican governor said his first-of-its-kind plan, dubbed "Pay Their Way," would spur economic growth while ensuring taxpayers would not be left picking up the tab.
“This solution allows for the state to make an investment in economic development in Milwaukee, while protecting Wisconsin taxpayers from risk,” Walker said in a statement.
The plan would create a nine-member sports and entertainment district to pay off $220 million of new state appropriation bonds using growth in income taxes paid by members of the Bucks and visiting NBA teams due to salary increases and new television contracts. Current tax collections from those sources would not be used for bond payments.
The bond proceeds would be contingent on the team's ability to secure the remaining $300 million for the arena. The Bucks have pledged about $150 million for the project, while the team's prior owner, Herb Kohl, has offered $100 million, according to a team spokesman, who said the total cost of the arena has not been set.
Bucks President Peter Feigin released a statement welcoming the governor's support for "a new state-of-the-art venue and entertainment destination."
"We look forward to working closely with Governor Walker, the state legislature, local officials and the entire community to make this vision a reality.”
The Bucks would likely leave Wisconsin in 2017 without a new arena, according to Walker's office. The team's departure would cost the state nearly $10 million in annual income tax collections and leave it on the hook for as much as $100 million in maintenance and debt service costs for the current arena, Bradley Center, without an anchor tenant.
The Bucks were sold for $550 million to hedge fund managers Wesley Edens and Marc Lasry last May. If they are sold again, Walker's plan would require sale proceeds to be first earmarked for repayment of the bonds.
(Reporting by Karen Pierog in Chicago; Editing by Jeffrey Benkoe)