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Readers weigh in on Bills subsidy debate

My Sunday column this past week focused on a provocative comment from departing Albright-Knox Art Gallery Director Louis Grachos. In my exit interview with him in November, Grachos complained about a political culture that allows Buffalo Bills owner Ralph Wilson to draw massive subsidies from taxpayers while local arts groups become the subject of a yearly political debate over whether they're worth the modest public investment they receive.

This, understandably, prompted some strong reactions from readers. Most of the comments on the articles agreed at least in part with Grachos' suggestion that the Bills seemed to be making off with more than their share of taxpayer money. But I'd like to share one reaction, an email I received from Cleveland student Anthony Scott, that makes a different argument:

News Arts Critic Colin Dabkowski asks for a debate in how public monies are used to fund arts institutions versus sports teams.

Referring to sports economists is mildly disingenuous of him, as he is also vulnerable to one of their key arguments –- leisure spending is interchangeable. The 2006 UB Regional Institute report on the arts asserts that nearly all of the public sector benefits of art support come from sales tax revenue, so they are easily replaced by entertainment dollars spent elsewhere if funding cuts take a toll on local art institutions.

However, income and property taxes –- revenue forms that can not be replaced like sales taxes -– unconditionally reflect public sector benefit. Dabkowski is wrong to cite the wide-ranging economic studies that discourage public subsidies for sports teams, since they largely ignore these significant tax streams in New York and Erie County. The UB arts report does not calculate these values, since this figure is mitigated by the tax-exempt status of these entities; moreover, calculating the income tax of their employees is problematic, as they could find similar jobs elsewhere in the area if public arts support (14.4% of institutional revenue) drops. Without the Bills, conversely, highly-paid professional athletes would no longer pay income tax here: assuming 8% state income tax on a $120 million salary cap, players alone generate around $15 million per year in revenue. Therefore, as outlined by Rocco Termini in a recent “Another Voice” feature, a mutually beneficial agreement -– with tangible economic benefits -– can easily be arranged between government and a sports team.

Scott's main point, that leisure spending is interchangeable (or "fungible," in economic terms) is one of the key issues in discussing the economic impact of cultural activity, including sports. That's why I wrote in my column that the UB study's assertion of some $264 million in positive economic impact is "somewhat dubious."

In the absence of theaters and galleries, many critics of this method of estimating economic impact have argued, residents would merely spend their disposable income on other leisure activities such as movies. But a key difference there is that arts and cultural organizations tend to keep money in the local economy, while many other entertainment options like going to a movie at a Regal multiplex take a larger share of money out of the community.

There's no doubt that payroll and state income taxes from the Bills make up for a significant sum of tax revenue for New York State. That makes the idea of a $200 million investment in Ralph Wilson Stadium a potentially revenue-neutral proposition from Albany's perspective, if you believe the Bills may actually leave in the absence of a deal. But the question for people who live here is whether the $7 million or more in annual taxpayer-funded subsidies for the Bills actually reaps significant returns for Erie County residents beyond the (admittedly important) psychological ones.

We lack a satisfactory answer to that question.

And that, in my opinion, is one of many reasons we need much better economic data and more independent studies on the true economic contributions of the arts and of sports that do not overstate the case. Too many of the reports we've seen have been funded or commissioned by the industries they purport to dispassionately examine, which means we cannot trust their conclusions.

Termini's proposal, and parts of Scott's letter, provide a good starting point. And though today's news about growing optimisim regarding a deal to keep the Bills in Western New York reminds us that this discussion may not have any practical effects, it's worth it to keep the conversation going.

--Colin Dabkowski

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Art | Theater
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