Opinion: Keep Vikings seats affordable
Contrary to popular belief, Minnesota smokers aren’t really paying the state’s long-term share of the new Vikings football stadium — multi-state corporations are.
But don’t feel bad, smokers — you have already contributed a significant chunk of change to the project.
The Minnesota Department of Revenue released collection figures for the one-time cigarette floor stock tax that contributes to Minnesota’s share of the new Vikings stadium financing.
Of the $30.5 million reported to the department from cigarette retailers and distributors, all but $1,292 has been collected by the department so far in September.
By law, $26.5 million of this will be available for Vikings stadium financing. It will go into a reserve fund, essentially to insure the viability of the stadium bonds floated by the state.
The remaining $3.96 million will go to the state’s general fund, along with the revenue from the increased cigarette and tobacco taxes that went into effect on July 1.
“The collection figure released today ensures that the state has the revenue to cover its portion of the Vikings stadium financing.” said Revenue Commissioner Myron Frans. “This one-time revenue is the only portion of the cigarette and tobacco tax that will go to finance the Vikings stadium.”
In May, Gov. Mark Dayton and the legislature passed two new sources of financing for the Vikings stadium.
The one-time cigarette floor stock revenues, which has now been collected, and tax revenues from closing the corporate income tax loophole that existed for unitary sales tax reporting. It’s this last tax that will actually provide long-term financing for the Vikings stadium.
The state is expected to generate $26 million the first year, and $20 million per year after that, by ending what Frans called a corporate “tax avoidance strategy” that companies with sales in Minnesota and elsewhere have been using.
Before the change, some businesses were able to avoid Minnesota corporate income taxes by attributing Minnesota sales to affiliates in other states.
Corporations are now required to report all those revenues in Minnesota.
The new revenue sources are needed because revenue estimates proved wildly inaccurate for the original stadium funding source — electronic pulltabs and electronic bingo games in bars.
The state is on the hook for $348 million to pay its share of the stadium project.
Of the project’s $975 million upfront capital costs, a $498 million public contribution will be split between Minneapolis and the State of Minnesota.
The Vikings have guaranteed that $477 million, or 49 percent, will be privately covered. The team will rely on a combination of private financing and equity, as well as NFL financing in the form of a loan repaid by stadium revenues.
The Vikings also have the option to use stadium builder’s licenses, which in other cities average $1,000 to $10,000 per seat, on top of the cost of the ticket.
State officials need to dig in and keep those seat license fees to a minimum. With public funding paying for more than half the cost of the new stadium, it’s only fair that tickets remain affordable.