President Barack Obama is using his budget to take on some of the most loathed people in sports — team owners threatening to bolt town if taxpayers don’t help build a new stadium — and it could put Republicans in a tough spot.

The budget proposal released on Monday would eliminate tax benefits that make it easier for cities to raise money for new, luxurious sports facilities.


These tax breaks have funded billions in stadiums and arenas, including almost $1 billion of tax-exempt debt for the new Yankee Stadium and about $325 million of tax-exempt debt for the Dallas Cowboys’ $1.3 billion stadium.

Lawmakers routinely bless these deals to shield their cities and states from the national embarrassment of watching their teams move out of town.

Obama’s proposal is unlikely to become law, but it may be more designed to spark a political debate that would force Republicans to decide whether they want to stand up for a tax break that some conservatives deride as a corporate handout.

The issue is already causing headaches for Wisconsin Gov. Scott Walker, who is mulling over a presidential bid, based on his conservative record.

Last week, he proposed issuing $220 million of state-backed debt for a new arena for the Milwaukee Bucks basketball team.

If Wisconsin does not raise money to help the Bucks pay for a new arena by 2017, then the team is under obligation to consider moving elsewhere, Walker said, speaking at the Metropolitan Milwaukee Association of Commerce on Jan. 27.

“That’s not an idle threat. That’s just the facts,” he said.

But Walker’s proposal is already facing criticism from conservative and small government groups in Wisconsin that worry stadium deals amount to corporate welfare.

“This is going to be a big fight,” said Bob Dohnal of Milwaukee who publishes the Wisconsin Conservative Digest. He questioned Walker’s insistence that the Bucks should get a new arena.

“All these claims about development and improving the economy are all just baloney,” Dohnal said. “Scott Walker is really concerned that when you lose a franchise, you get a black eye.”

Representatives for Walker did not immediately have a comment on Tuesday. The details of Walker’s Bucks financing package will be included in his budget, which was scheduled to be released Tuesday night.

The Koch brothers-backed Americans for Prosperity-Wisconsin has also questioned Walker’s arena plan.

“We are disappointed to hear that the state is embarking on yet another plan to finance a sports arena in Milwaukee,” David Fladeboe, the state group’s director, said in a Jan. 27 statement. “While it appears that some protections are being put into place, the Governor’s plan would put the state and taxpayers on the hook for future obligations.”

Across the country, the rate and cost of stadium construction is increasing, and paying for glitzy facilities has become political football for state and local lawmakers. New stadium deals have been attacked by liberals in San Francisco and tea party activists in Atlanta.

“The political resistance to stadium subsidies has definitely increased in the last 15 years,” said Roger Noll, an economics professor at Stanford University who has written about tax breaks for sports stadiums. “Citizens have become better informed. It’s politically easier to withdraw the subsidy now than it would have been 15 to 20 years ago because it has already become something politically dubious to do.”

So far, congressional Republicans are shrugging off the issue as the debate surrounding the president’s budget has focused on more high-profile items.

Senate Finance Committee Chairman Orrin Hatch (R-Utah) has supported efforts to scrutinize the use of subsidies for sports stadiums in the past, but on Tuesday he noted the projects can be good for the cities.

“Cities, townships and states are generally pretty careful when they build stadiums,” Hatch said. “Let’s face it, some of these stadiums have been crucial to some of the larger cities and teams, I might add.”

In the budget proposal released on Monday, the Obama administration pitched the idea as a way to have the teams that benefit from the stadiums assume more of the burden of paying for the project.

“The current structuring of the governmental bonds to finance sports facilities has shifted more of the costs and risks from the private owners to local residents and taxpayers in general,” the Treasury Department said in a summary of the proposal.

Here’s how it would work.

Under current law, governments can use the proceeds from tax-exempt bonds for private activities, such stadium projects, unless more than 10 percent of the debt service comes from a private business, and more than 10 percent of the use of the facility is attributed to a private interest. Both have to be true for the exemption to be denied.

As part of its fiscal 2016 budget request, the Obama administration is proposing to change this dual test for sports facilities by focusing the exemption only on the question of how much the facility is used by a private interest.

“By removing the private payment test, tax-exempt governmental bond financing of sports facilities for professional sports teams would be eliminated,” according to the budget. The proposal would be effective for bonds issued after Dec. 31, 2015. Killing the tax break would raise $542 million through 2025, according to the Obama administration.

Team owners have argued that new stadiums increase jobs and tax revenue for municipalities. Fancy stadiums lure tourists and boost local pride.

Tax-exempt bonds are not the only way local governments can use taxpayer resources to fund stadium projects, but they are a popular avenue for raising this money.

“Tax-exempt municipal bonds represent the least-expensive source of capital available to most team owners and are the preferred method of financing stadium construction,” according to a 2012 UBS research report.

But critics of the financing deals argue there is scant evidence the new arenas help the local economy and amount to little more than a giveaway to rich team owners who are threatening to move their teams elsewhere.

“There is no evidence that professional sports stadiums do anything to increase economic development,” said Howard Gleckman, a fellow at the liberal-leaning Urban Institute, who applauded the president’s budget provision.

Some recent tax-exempt bond deals for new facilities have gotten local governments in credit trouble. For instance, Glendale, Arizona, in 2011, suffered a credit-rating downgrade stemming in part from the Coyotes hockey team’s bankruptcy.

Until the president released his budget, the issue had faded from the Washington debate in recent years.

But eliminating the loophole was a crusade of former Rep. Dennis Kucinich (D-Ohio), who held a series of hearings in 2008 to scrutinize stadium deals for the New York Yankees and other teams.

“This is another type of Super Bowl. It’s a Super Bowl of tax breaks,” Kucinich said this week while applauding the president for including the budget provision.

Zachary Warmbrodt contributed to this report.