S. 1879 would increase funding for educational and research facilities at private colleges and universities by removing the $150 million cap on the amount of tax-exempt bonds that can be issued on their behalf. The Senate twice has passed this measure as part of larger legislation that was vetoed for unrelated reasons. S. 1880 would end tax-exempt financing of professional sports facilities. Recently, a spate of professional sports facilities have been financed with tax-exempt bonds, even though Congress acted to proscribe this practice in 1986. As Senator Moynihan has stated previously, "the bill would close a loophole that ultimately injures state and local governments and other issuers of tax-exempt bonds, provides an unintended federal subsidy, and contributes to the enrichment of persons who need no federal assistance whatsoever."
The revised effective date is intended to provide needed certainty to those localities that have expended significant time and funds in planning professional sports facilities. "The revised effective date," Senator Moynihan explained, "strikes the proper balance between closing the loophole in present law -- a loophole that benefits only team owners and their players -- and addressing the concerns of those localities that have been planning new stadiums."
STATEMENT BY SENATOR MOYNIHAN ON THE STOP TAX-EXEMPT ARENA DEBT ISSUANCE ACT
"Mr. President, a decade ago, I was much involved in the drafting of the Tax Reform Act of 1986. A major objective of that legislation was to simplify the Tax Code by eliminating a large number of loopholes that had come to be viewed as unfair because they primarily benefitted small groups of taxpayers. One of the loopholes we sought to close in 1986 was one that permitted builders of professional sports facilities to use tax- exempt bonds. We had nothing against new stadium construction, but we made the judgement that scarce Federal resources could surely be used in ways that would better serve the general public good.
The 1986 Act accordingly prohibited the use of "private activity" bonds (that is, bonds for non-governmental purposes) for professional sports facilities. Yet, despite Congress' action, sports team owners, with help from clever tax counsel, soon found a way around the new law: they persuaded local governments to issue tax-exempt public bonds to finance new stadiums. As the columnist Neal R. Pierce wrote recently, team owners "were soon exhibiting the gall to ask mayors to finance their stadiums with general purpose bonds." We did not anticipate this. It was -- and still -- perfectly legal.
The result has been a boom unlike anything we have ever seen in construction of new tax-subsidized professional sports stadiums. In the last six years alone, over $4 billion has been spent to build 30 new professional sports stadiums. According to Professor Robert Baade, an economist at Lake Forest College in Illinois and an expert in stadium financing, that amount could "completely refurbish the physical plants of the nation's public elementary and secondary schools." An additional $7 billion of stadiums are in the planning stages, and there is no end in sight. This is why I recently introduced S. 1880 -- the Stop Tax-exempt Arena Debt Issuance Act (or "STADIA" for short) -- to end the Federal tax subsidy for these stadium deals. Only the team owners and players profit, while taxpayers and fans pick up the tab...."