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The Effect of a Tax
By William Wilcoxen
October 6, 1999
Part three of a series.
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When given a chance to raise their own taxes, voters usually decline the opportunity to pay more. But that tendency will be tested next month in Saint Paul, where a ballot question asks if the city should raise its sales tax to help pay for a new open-air baseball stadium for the Minnesota Twins. In part three of our series on the stadium issue, Minnesota Public Radio's William Wilcoxen looks at the prospect of a tax hike in Saint Paul and the economic benefits ballpark advocates say the city would reap.

Stadium Wars
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BETSY BOCKSTRUCK and her brother are the fourth generation to run the family's downtown Saint Paul jewelry store. Standing between her Waterford crystal and Rolex watch displays, Bockstruck looks across the street at a new office building nearing completion and declares that a new baseball stadium would accelerate the momentum in the capital city.
Bockstruck: It's an opportunity to generate revenue that eventually could offset property taxes. And certainly anytime there's economic growth you're going to have an increase for everybody. And the fact that it gives a little notoriety to our town here.
Bockstruck says raising the sales tax in Saint Paul by one-half of one percent would probably not affect sales at her store. But some businesspeople do have qualms about raising the city sales tax. Gary Griffin, co-owner of the Minuteman Press in Saint Paul's Midway neighborhood, says the existing half-percent city sales tax is a hardship in an industry where profit margins are thin and competition abundant. Griffin says he has lost at least two large accounts to printers in Arden Hills and Bloomington because he couldn't compete on cost. He fears the prospect of the city tax climbing to one percent.
Griffin: I hear on the radio, "Oh, one percent" or "half a percent on $10, who can't afford that?" The problem is it's not half a percent on $10, it's half a percent on $10,000, as they make brochures and send out letters and print envelopes and business cards. And half a percent on $10,000 is a lot of money.
Among Twin Cities-area municipalities with a city sales tax, half-a-percent is customary. Bruce Erickson, an economics professor at the University of Minnesota's Carlson School of Management, says Saint Paul raising its sales tax to one percent would particularly affect businesses close to the city's border and those in industries where price is displayed prominently - gas stations, for instance. But Erickson says using a sales tax to pay for a ballpark does allow the city to share the cost with visitors.
Erickson: If the stadium does attract more people from outside the Twin Cities, when they come to the city it'll be people outside of the city who pay part of the tax. If it were an income tax to pay for the stadium, it would be entirely the people in Saint Paul who'd pay the income tax.
Saint Paul Mayor Norm Coleman has been pitching the stadium as a way to shift the tax burden from property owners to visitors.
Coleman: Sixty percent of the sales tax comes from people who don't live here. You bring two to three million people here to spend money that generates wealth in the core city.
Coleman's proposal calls for building a 38,000-seat, open-air ballpark on one of five sites near Saint Paul's downtown Mississippi riverfront. The $325 million cost would be split between the Twins owners, the city, and the state. If next month's referendum passes, the city would still need the Legislature to approve the sales-tax increase and allocate state funds.

Coleman envisions a Saint Paul ballpark that fits into the surrounding neighborhood in the way four-year-old Coors Field blends into Denver's lower-downtown area. On game days 1,500 people work at Denver's ballpark. Some oversee the computer-controlled lighting system, others hawk souvenirs. A souvenir vendor named Garrison works the concourse on the first base side.
Garrison: On sunny days the hats go good. Other than that it's usually the souvenir baseballs that we have.
Garrison's work is part-time and seasonal. He felt fortunate last winter to find some warehouse work, packing souvenirs into boxes. He says he loves working at the ballpark but thinks he'll soon need to find a job that can offer more hours.

Saint Paul attorney Tom Montgomery, who founded a group opposing a city-subsidized stadium, says the jobs that would follow the Twins from their current home in Minneapolis' Metrodome to a new facility in Saint Paul are not worth the investment in a new ballpark.
Montgomery: You're going to get some construction jobs for the construction workers who live out in the suburbs. And then you're going to bring the peanut sellers back across the river, and they'll still be selling peanuts here and they'll still be making peanuts. So don't sit there and tell me this is going to be some sort of economic boon in terms of jobs. It's not.
Economic consultant Paul Anton, who was hired by the city to study the stadium proposal, agrees that the return on the stadium investment would not come in the jobs it generates. Anton says the ballpark's value would lie in its capacity to breathe new life and confidence into the neighborhood.

Condominiums costing up to $1 million are sprouting in the shadows of Coors Field. But the most obvious change in Denver's lower downtown is the preponderance of bars and restaurants, including 12 breweries within three blocks of the ballpark. Kristin, who works at a bar called "Splinters From The Pine," says the ballpark has made a huge difference to the neighborhood.
Kristin: Oh, it's been unbelievable. It's been like a complete 100-percent turnaround.
MPR: What was it like before?
Kristin: It was trash. There was nothing. It was the ghetto.
MPR: And now?
Kristin: And now, well, look around. It's wonderful.
With a flush economy and a booming population, new development is rampant in the Denver area. Suburban Douglas County was the nation's fastest-growing county for several years in the 90s. Steve Medema, who chairs the economics department at the University of Colorado-Denver, says the new ballpark didn't create wealth as much as it redirected it from the suburbs to the inner city.
Medema: For the six-county metro area my own opinion - and most economic research backs this up - there is no net gain. There may even be a net loss. What you end up doing is transferring the entertainment dollar from one area of the city or county or area to another. So when people say, "Look at all the jobs this has created; all these waiters and so on," Well, we've had all this influx of population, you'd be having more restaurants built in other parts of town and more people would be employed as waiters in the suburbs instead of in the city. So really, it's a wash. It's a redistribution of income from one group of the population to another.
Many Saint Paul business owners are anxious to redirect some of Minnesota's entertainment dollars to the capital city. Some stadium supporters say if a new ballpark is done well, it could become a tourist attraction in itself, attracting more visitors than the Twins draw in the Metrodome. In her jewelry store, Betsy Bockstruck remembers how downtown retailers feared the opening of Bloomington's Mall of America, only to find the mall's presence gave the Twin Cities a bigger retail pie to slice. On November 2, Saint Paulites will decide if the potential dollars and higher profile of a new ballpark warrant the unusual step of a self-imposed tax increase.