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COL Framing the stadium debate

Federal Reserve vice president calls for referendum

Art Rolnick played mountain-top seer on Tuesday, opposite the House Tax Committee's role as wisdom-seeking decisionmaker. The committee looked for advice on whether to finance new stadiums for the owners of the Minnesota Twins baseball and Vikings football clubs. Rolnick answered with a lesson.

Rolnick, a senior vice president and research director for the Minneapolis Federal Reserve Bank, brings great skepticism to public financing for private business. On stadium funding his message was clear: Know who benefits and understand that any decision comes with a cost.

In the end his comments could be summed up in a far less mystical way. The folksy side text was a reminder to dance with the girl that brung ya. In a word, that girl is education.

Public investment in stadiums will have little positive impact in the state's $200 billion economy, Rolnick said. Sports, as an industry, is too small to leverage such a large public investment into a force for greater growth.

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New stadiums, however, will increase the value of the two teams. Who benefits? Overnight, public investment in stadiums will do more to create a windfall for team owners than anything else. This is the one and only reason why team owners are lobbying for new stadiums, Rolnick said.

Minnesota has one of the most powerful state economies in the nation, Rolnick said. He challenged lawmakers to remember how the state arrived at the dance. "The state's economy is driven by the quality of its work force," Rolnick said.

Since 1957, Rolnick noted, the state has poured vast sums of money into education. Minnesota companies thrive because workers carry the skills from quality K-12 and higher education. Education offers a return on investment that can be levered into benefits for companies (profits) and individuals (wages).

Rolnick left the committee with a call for a referendum: How should the next dollar of taxes be spent? A proposal by Gov. Tim Pawlenty has been carried forward by Rep. Doug Stang, R-Cold Spring, that would use a mix of tax dollars for partial construction funding. Team owners and fan revenue cover the remaining costs.

Pawlenty has argued that new stadiums create a better quality of life for state residents and would help business attract and retain valuable workers. It's a strong argument that Rolnick admits has some merit.

The Legislature is debating the stadium question as adjunct legislation. A $160 million deficit could be partially filled with cuts to education. As such, any reductions to education will be measured against any public investment in stadiums. Rolnick, a forceful advocate for education, would frame the argument as stadiums vs. education, public money vs. private gain, of opportunity costs.

Rolnick seems to say it's one or the other. A better question is whether both education and stadiums can together produce greater overall economic gains? This is a good question for a Federal Reserve researcher.

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