The No-Growth Giveaway

Cosmo Garvin and the Sacramento News and Review have written the kind of deep analysis of the arena issue the city needs but hasn't received. He finds what anyone who has followed the sports extortion game would expect: Spending huge amounts of taxpayer dollars in giveaways to basketball arenas has little or no benefit to local economies. The outrageous claims of boosters "aren't real."

But the real news is that Kevin Johnson's team of hired liars have now essentially conceded that Garvin and the economic doubters are right.

They have released a new "study" making the usual bogus claims of the kind Garvin debunks. They say the arena will increase economic output in the region by $11.5 billion over 35 years.

Since this is the holiday season, let's be charitable and assume they are right. How big is $11.5 billion over 35 years?

The Sacramento metropolitan area had an output of $97.6 billion in 2012. If you assume economic growth at a nominal rate of 4 percent a year, the region will produce $8.2 trillion in total output over the next 35 years. Divide the claimed arena boost by total output and you find the claimed "incredible multiplier effect" from the arena would amount to only 0.0014 of the region's output over that 35 years.

How "incredible" is that? It is so tiny you need a microscope to see it. It is the economic equivalent of 11 hours in a year, or the length of two football fields on a drive from the State Capitol to Union Square in San Francisco. In other words, it is exactly what Cosmos Garvin's fine report shows: Arena subsidies bring little or no growth.

And now Kevin Johnson and his cronies have admitted it.

An Arena? Let the Grandkids Pay

After looking over Sacramento’s plan to go deep into debt to fund a giveaway to National Basketball Association, the editors of the Sacramento Bee proclaim it “doable.” The city, they assure their readers, has “the numbers to back it up.”

This conclusion can only mean those editors didn’t read or understand the numbers, because the numbers themselves shout, “Don’t do this!” The numbers describe a city that, despite imposing the highest and most regressive taxes in its region, still suffers from depleted reserves, large unfunded liabilities, and reduced levels of public services.

So how, in the face of that fiscal mess, does Sacramento buy an arena it can’t afford? The numbers say city leaders and the Bee want to make the grandkids pay.

Because city officials aren’t interested in helping citizens understand what they are up to and what the numbers mean, I’ve turned them into this picture:

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The city wants to sell bonds to fund $212.5 million of its subsidy to a new arena for the Sacramento Kings. That’s the red-shaded arena on the graph. It plans to repay the debt with future revenues from parking in the central city.

But there’s a big problem here. The parking revenues are already spoken for. They are used to pay for parking operations and the mortgages on the city’s garages, with the balance going to the general fund for police and other services. There aren’t enough of those dollars to pay for all those things and the arena debt too.

To solve the problem of having more wants than wallet, the city takes the low road: borrow a lot more and delay the obligation to repay far into the future. It plans to take out an extra $91.5 million in debt (the yellow-shaded area in the picture) and use some of that extra borrowed money to pay the interest on the bonds for the first four years. A $212.5 million subsidy to the arena thus becomes $304 million in debt to be paid off over 36 years.

Is this “doable?” Yes. There’s a whole industry of investment banks, financial advisors, and consultants who, for a price, will show how to put together and sell, at very high prices, “doable” debt for cities that want to live beyond their means. (There’s also an industry of people who, for a price, will tell you how sexy you are.)

But it’s doable in the same way that you could take out a home equity loan to add an extra room on your house, then pay the interest on the equity loan by stopping your contributions to your retirement account and pulling a cash advance out of the Visa card until you’ve paid off the car loan and have a few extra dollars. What’s “doable” is often the way to end up poor and bankrupt.

The black line on the graph shows the remaining debt from the deal over time. The city won’t begin making principal payments on that debt until 2022, and full principal payments won’t begin until 2034. The whole debt won’t be repaid until 2050. And repayment of the $212.5 million portion of the debt taken out to subsidize the Kings (the red-shaded area) won’t start until 2038, 22 years after the arena is supposed to open. The grandkids will pay all of it.

If that debt were buying something likely to make Sacramento a better place for them in 2040 or 2050—flood control, schools, bridges, parks, housing—pushing the repayment obligation deep into the future would be one thing. But arenas are more like cars than houses. They begin losing value the day they open. Team owners drive them for 10 or 15 years, then declare them “obsolete.” They demand taxpayers buy them a new one, or at least a complete and expensive overhaul. And cities rarely have the courage to refuse them.

So let’s be clear about what the numbers mean. The city and the Bee want the largest burden of paying for an arena in the present to fall on people in the future who will likely never buy a ticket there because it’s already gone or “obsolete.” (And if you doubt that, go count the number of today’s arenas that were around 30 years ago and never substantially overhauled. It’s zero.)

Instead of being able to use their own resources to pay for the public services and projects they need in their own time, our grandchildren will be paying for a subsidy a previous generation cheered but then put on the credit card—to go along with the unfunded liabilities for pensions and retiree health benefits of city workers.

Isn't that the kind of government irresponsibility we pay newspapers to warn us against? Apparently Bee bigwigs Cheryl Dell, Joyce Terhaar, and Dan Morain are so busy waving pompoms for the owners of the Kings they don't have time to watch out for the future of their community.

Remembering the SF Ballpark Five

Most sports memorabilia recall a favorite game or player. The autographed baseball sitting on my desk is different.

The autographs belong to the group that dubbed itself the SF Ballpark Five — Gregg Lukenbill, then owner and managing partner of the Kings; Maurice Read, his spokesman; and political consultants David Townsend, Jack Davis, and Richard Schlackman. Amid all the huffing and puffing in Sacramento about who or who's not giving money in the fight over the proposed subsidy to the Kings and their wealthy owners, their signatures recall a day when the Kings ownership itself was the shadowy "outside" force siding with taxpayers against sports extortion.

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It was 1989 and the extortionist in question was Bob Lurie, owner of the San Francisco Giants. He was threatening to move the team to Tampa or some other eager town if the taxpayers of San Francisco would not build him a new stadium to replace the wind tunnel known as Candlestick Park. Mayor Art Agnos led the charge with a measure to do just that for the November ballot.

Unfortunately for the extortionists, the San Andreas Fault choose the wrong moment to slip. On October 17 the Loma Prieta earthquake knocked down a portion of the Bay Bridge, damaged San Francisco's Embarcadero Freeway, and destroyed blocks of houses in the Marina District.

Agnos briefly put the ballpark subsidy push on hold but then resumed campaigning. Opponents of the deal replied on the final weekend with a mass mailing suggesting that, what with the earthquake and all, the city might just have more pressing uses of tax dollars than lining Lurie's pockets.

And here's where Agnos dropped the bomb he had been holding in reserve: The opponents' mailer, he charged, was financed by Gregg Lukenbill of Sacramento, who was trying to steal the Giants. "We haven't had any looting after the earthquake until now," Agnos proclaimed. In a front-page editorial the San Francisco Chronicle piled on: "A contemptible, inflammatory and highly inaccurate hit piece... stands exposed as a scheme by Sacramento promoters." (How much importance do newspapers attach to subsidizing the home team? In all my years of reading the Chronicle — through the threat of Cold War nuclear holocaust, the turmoil over the Vietnam War and civil rights, the crimes and impeachment of Richard Nixon, the assassinations of Mayor George Moscone and Supervisor Harvey Milk — that is the only front-page editorial I can recall.)

Lukenbill denied any involvement. And despite Agnos's charges and the Chronicle's ranting, San Francisco voters turned down the subsidy plan.

But Lukenbill was lying.

Maurice Read, his spokesman, and David Townsend, the Sacramento political consultant, had met Davis and Schlackman, managers of the campaign against the subsidy, for lunch in San Francisco on September 29. They learned that the campaign was winnable but needed money for opposition mailers. They relayed the news to Lukenbill, who was deeply committed to building a privately financed stadium to bring the then-LA Raiders and baseball to Sacramento. Lukenbill knew that if the Giants stayed in San Francisco the team could block any competitor from locating in Sacramento, within its monopoly 100-mile territory. To improve Sacramento's chances, he called business associates and asked them to donate to opponents' campaign. One of them, a Woodland steel manufacturer, made a $12,500 contribution reported the day before the election.

"I made a few phone calls to protect Sacramento's interest in potentially getting a baseball team here," Lukenbill admitted months later. "I'm not ashamed of that. I'm proud of it. I want baseball in Sacramento and I'm proud of it and I'm not going to back off of it."

What Lukenbill didn't know was that Agnos and the Giants, their campaign failing in the wake of the earthquake, had been tipped off to his possible involvement within days of the first contact with the opponents, and had been itching to use the "outsider" threat in a last-minute push. Nor did he know that Agnos was a bad loser. The mayor urged San Francisco District Attorney Arlo Smith to prosecute his opponents; Smith, hoping to goose his campaign for state attorney general, complied. He got the grand jury to indict Lukenbill and the rest of the Ballpark Five on the incredible theory that their efforts to help the anti-subsidy campaign constituted a conspiracy to create a campaign committee that had failed to report its existence.

But this is the rare story with many happy endings:

• Having failed four times in five years, first in San Francisco and later in San Jose, to get voters to buy them a new stadium, the Giants, under new ownership, gave up their extortion bid and built their own privately financed ballpark. The team has gone on to win two World Series.
• Having protected their public resources for investments more potent than subsidizing sports owners, San Francisco and San Jose are now among the most economically buoyant big cities in the world.
• When the Ballpark Five reached court, the judge dismissed the case, saying there was no evidence any laws were broken and no grounds for the grand jury's indictment or the district attorney's pursuit of the case.
• Dogged by the judge's conclusion that he had been engaged in a political prosecution and hurt by revelations that he had sought to speed up the case to help his campaign, Arlo Smith was defeated in his campaign for attorney general.

The baseball on my desk freshly reminds that, in politics as in sport, the game is hardball, and though everybody mouths the bromide about "it's how you play the game," the spitball your side throws never seems as wet as the one loaded up by guy in the other dugout.

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An etiquette question

Dear Miss Manners:

What is the appropriate tip to leave to Sacramento Mayor Kevin Johnson for so ably driving up the sales price of our Sacramento Kings basketball franchise? We do not wish to appear gauche or ungrateful.

With thanks for your assistance,

The Maloof family

Will the NBA love Sacramento if it doesn’t put out?

I’m reminded, as I watch the saga of the Sacramento Kings, of one of those movies about the plain girl in high school—the girl who’s smart and sensitive but aches to have the cool kids like her and a boy tell her she’s pretty.

Right now, with the National Basketball Association’s relocation committee having recommended against moving the Kings to Seattle, we’ve reached the scene when the heroine, her inferiority complex in full bloom, sees her wildest dream come true. She’s been invited to the prom! And not just by another nerd. No, she’s been asked to share the big night with the star of the basketball team, the most handsome and suave of the in-crowd!

Doubt—does he really like me?—gives way to giddy excitement. She trades her normal drab uniform (baggy brown sweater over black tights) for a shimmering sheath, sweeps up her hair in a stylish do, and performs magic with the makeup tray. Bliss is just a limo ride away.

Of course, the audience knows what she doesn’t, something she may suspect but won’t let herself believe. The basketball hero, a bully and predator, has asked her to the prom only because he’s bet his crew he can have his way with her before the night is out. The homely ones are the easiest to nail, he brags. They’re so desperate they always put out.

Sacramento has so far played the heroine to perfection. If they awarded Oscars for desperation, it would sweep the field. Driven to madness at the prospect of losing the Kings, the city’s elected officials broached the idea of offering more than $300 million, roughly $600 per city resident, in subsidy to the NBA.

But now the plot turns. With the move to Seattle vetoed, the argument that Sacramento taxpayers must throw a wad of cash at the NBA because keeping the Kings was somehow economically vital—a weightless argument always—is moot. Here they stay.

Moreover, the city’s latest budget, released the same day the NBA decision was revealed, makes clear that an arena subsidy is money the city doesn’t have and, even if it did have it, needs more vitally elsewhere. The budget shows deficits and more cuts in already savaged city services as far as the eye can see—and then comes the “cliff”: the expiration of the temporary city sales tax that went into effect April 1.

So this is where the plain girl thanks her date for a lovely evening, expresses her hope that they will stay friends, and closes the door. There is no reasonable case for putting out.

The End.

Roll the credits.

Wait, wait, wait, I hear cheerleaders for an arena subsidy shout, that’s not how the movies go. The basketball dude doesn’t take “no” for an answer. If Sacramento doesn’t put out, the NBA will change its mind and move the team.

Really? Do those cheerleaders understand what they are telling us?

That all the nice words the NBA has spoken about Sacramento’s long and loyal customer support of the Kings are just sweet nothings, lies whispered in our ears to distract us from its true agenda.

That the crew of superrich would-be owners of the Kings and self-proclaimed believers in Sacramento and its future, men whose wealth surpasses all understanding by mere mortals, men like Vivek Ranadivé, who modestly bills himself on his blog as “entrepreneur, technology visionary, author, philanthropist, angel investor,“ are so bereft of capital and imagination they to cannot do what Gregg Lukenbill—the local developer, a guy in flannel shirts, jeans, and steel-toed boots, who brought the Kings to Sacramento in 1985—managed to do: build an arena without having to apply for AFGB (Aid to Families of Grasping Billionaires).

That should Sacramento balk at his advances, Ranadivé will lean into the face of the heroine and say, "Don’t you get it, you ugly bitch? I’m only here because I bet I could get into your pants."

Now that’s a movie I’d pay to see.

Neglected Questions at the Bee

Of all the silly things my old employer the Sacramento Bee has written in its campaign to keep the Kings in town, it's hard to find one sillier than describing Sacramento's "struggling downtown" as "the neglected heart of the capital city."

Neglected? Have they put the paper’s news archive down the memory hole?

Just off the top of my head, here are a few projects built using public money, in whole or part, since I moved to town in 1985:

Hyatt Hotel.

Sheraton Hotel.

Citizen Hotel.

Convention Center expansion.

City Hall expansion.

California Environmental Protection Agency.

Downtown library expansion and U.S. Bank Tower.

Esquire Building and IMAX Theater.

Downtown Plaza expansion.

Elks Building renovation.

Dive Bar.

Cosmopolitan entertainment complex.

County jail.

Matsui Federal courthouse.

Numerous housing projects, including the lofts where Gov. Jerry Brown bunks when he’s in town.

The list could go on and on. I haven’t gotten to all the investments made by the state after former Gov. Pete Wilson reversed state policy to encourage new agency buildings to locate downtown, a change that led to construction of the huge East End project, the Justice building, and the Secretary of State/Archives complex. There’s hardly a block downtown that hasn’t been blessed with a subsidy.

Far from neglecting it, Sacramento has been devoting attention and public dollars by the hundreds of millions on downtown for more than a half century. And what result has that devotion yielded? To hear the Bee tell it, a “struggling downtown.”

Anyone with a shred of curiosity or even a little concern for the public interest might be tempted to ask some questions here. If all those public dollars have left downtown still in need of “revitalization,” maybe the city has been doing things wrong. Are there policies that prevent efficient use of the money? Are public dollars being invested in the wrong way. Are they being overwhelmed by policies and trends that push people and private investment to the urban fringe? Are the benefits of downtown public investment going to developers instead of the broader public?

The Bee, it seems, has neglected to ask.

Eye on Sacramento Eyes the Deal

Eye on Sacramento, a local citizen watchdog group, has done what the Sacramento city staff and the Sacramento Bee have failed to do: write a comprehensive analysis of the terms and risks of the proposed city giveaway to the NBA Kings.

Read it and be sure not to miss my favorite part: where Stanford economist Roger Noll, a leading expert on sports economics, notes that the free luxury suite that the City Council and Mayor have negotiated for themselves will cost Sacramento taxpayers $8 million.

Now we know who are the real Kings in Sacramento.

Sacramento's Pig in a Poke

Here's a little quiz. Below are extracts from two separate documents assessing the proposal that Sacramento taxpayers hand over a quarter of a billion dollars to subsidize a new arena for the Kings pro basketball team. Read them and then answer a question.

1. The development of the Entertainment and Sports Center [ESC] will not only transform Downtown Plaza into a thriving center of entertainment and activity, it will also provide Sacramento with a first-class venue for sports, entertainment and cultural events.... The project will serve as a catalyst for economic development in downtown and throughout the region.

2. The proposed new arena... poses a variety of challenges for the City of Sacramento’s fiscal health. The city’s fiscal position is already tenuous—the Great Recession hit Sacramento particularly hard.... Spending money on an ESC will affect the local quality of life to the extent that these resources could be used to backfill some underfunded local assistance programs, education, or infrastructure projects. In addition to the already tenuous fiscal situation, the projections of the increase to local economic activity underlying the projected economic impact of the ESC are likely overstated.... The city is gambling with this investment. If it fails, it will put enormous stress on the city’s finances in the near and distant future.

One of these passages was written by an advisor employed by a team owner seeking the subsidy from the taxpayers. The other was written by a city employee charged with providing sound advice to elected officials and protecting the public interest. Which is which?

It will surprise no one that the first passage comes from the city staff report laying out the terms of the newest version of the arena giveaway. Such puffery has been the norm from the city in the arena discussion.

No, the surprise is that passage that tries to make realistic judgments about Sacramento’s economic strength and fiscal capacity to do an arena deal comes not from those paid to protect the public but from the analysis of the 2012 arena proposal (the current plan Is largely the same) that was written for the Maloof family, owners of the Kings, by Christopher Thornberg of Beacon Economics.

You won’t find anything in the city staff report that approaches Thornberg’s informed concern for the public interest and the future of the Sacramento. I won’t repeat what Neil deMause has written at Field of Schemes in his dissection of the arena term sheet and what he calls the “perpetual parking revenue machine.” The report is full of double-counting and lacks the detail needed for the public or council to make an informed judgment on its workability. I’ll only note that it’s an insult to the intelligence of elected officials and voters to offer up a half-baked analysis on a decision of such magnitude.

But even more troubling than the parking mystery black box is the city staff’s continued use of arena revenue projections that Thornberg has shown, through careful analysis of the Kings own books and Sacramento’s economy, “to be based on, charitably, best-case scenarios or, not so charitably, a wing and a prayer. Rather than hoping for the best but planning for the worst, this arena proposal plans on the best while ignoring the worst.”

Relying on wishful thinking would put both the city and team at risk, Thornberg pointed out. “When the expected revenues fail to materialize, both will end up severely financially distressed. Given the current budget difficulties faced by the city, such potential outcomes cannot be ignored—as the lessons of Stockton, California, and Harrisburg, Pennsylvania, demonstrate.”

Thornberg’s analysis and message, which I highly recommend you read, became even more relevant with the vote last week at the California Public Employees Retirement System to raise pension contribution rates by 50 percent over five years, which will deliver a hit to city finances roughly double the size of the proposed arena subsidy. It’s not often a consultant of Thornberg’s caliber—and he is widely seen as one of the most sane and reliable economists in the state—writes so bluntly. But it’s the kind of bluntness that good staff provide when big decisions with big stakes are at hand.

And, sadly, it is exactly what Sacramento’s own lavishly paid city manager and treasurer have failed to deliver. They totally ignore Thornberg’s work and fall back on the wing and the prayer. Why? Is it arrogance? Incompetence? A careerist desire to tell the elected bosses what they want to hear, the public good be damned? I can't say.

All I know is this: In my years covering Sacramento city finances as a journalist and serving as deputy state treasurer, I have seldom seen such shoddy analysis and so little concern for the public good from public servants. If this is all Mayor Kevin Johnson and the City Council expect, Sacramento is in deeper trouble than any of us ever imagined.

NBA Handout? Let Voters Decide

It now looks like there’s a chance that the decision about whether to pay extortion to the billionaires of the National Basketball Association could be made by the people of Sacramento themselves. Two lawyers representing opponents of the subsidy to the Kings franchise have sent a letter to the city’s leaders asking for a public vote on the question and suggesting that a referendum is likely if the city council does not itself seek voter approval.

A public vote is a good idea. As we pointed out in California Crackup, the referendum is the underused tool in the kit of California direct democracy. Unlike the state’s inflexible initiative, which is used for getting around elected lawmakers and tying their hands, the referendum is about holding a conversation: Our representatives make decisions and through the referendum we voters tell them whether they got it right, or should go back and try again.

The people’s right to pass judgment on legislative action through the referendum is guaranteed in the California constitution and Sacramento’s city charter. “The powers of the initiative, referendum and the recall of elected municipal officers are hereby reserved to the electors of the city,” the charter states, echoing the language of the state constitution. “All ordinances which may be passed by the city council shall be subject to referendum, whenever the use of the initiative or referendum is permitted by state law applicable to cities,” the charter provides. Qualifying a referendum against the issuance of revenue bonds for the arena would require signatures of 10 percent of the number of people voting for governor at the 2010 general election, or about 12,000 people.

If the past is truly prologue, though, expect Sacramento Mayor Kevin Johnson and his allies on the council to do everything they can to avoid making voters part of the conversation.

As the lawyers’ letter notes, “Last year, the City Council expressly voted not to allow the residents of Sacramento an opportunity to vote on the prior version of the proposed subsidy,” and put off taking any legislative act that might have triggered a referendum vote. It is the standard tactic of these sports extortion games to use a combination of delay and made-up deadlines to turn subsidy decisions into moments of crisis, where drama reigns and emotion defeats evidence and logic.

Expect Johnson and the friends of the billionaires to tell citizens that there can’t be a public vote because the deadline is too near—even though the deadline is too near because they wanted it that way. Expect them to follow the same path as the city of Santa Clara, which blocked a voter referendum on the subsidy for the new 49er stadium. Sacramento City Attorney Jim Sanchez has already claimed to reporters that the council’s upcoming March 28 vote on a “term sheet” for an arena handout isn’t subject to voter review because it isn’t a “final” act.

But California courts have found that the referendum right applies broadly to all legislative acts by city councils, and state law explicitly recognizes the referendum can be used, for example, to test voter approval of issuing revenue bonds, which would likely be used in any arena subsidy scheme. A time will come, perhaps many of them, when the council will have take a legislative action to make an arena subsidy real, and thereby trigger a referendum opportunity.

As divisive as the sports corporate welfare issue is, any attempt by Sacramento’s leaders to deny the city’s citizens their final say in such a critical decision would be more explosive still. Wouldn’t it be better to have the civic conversation upfront, before voices get raised and lawsuits filed?

Faulty Sacramento Fault-Finding

My old newspaper, the Sacramento Bee, has once again gone into full panic mode over the rumors that a Seattle group may be trying to buy and relocate area’s National Basketball Association franchise, the Sacramento Kings. Dare I suggest that what the Bee’s readers need at the moment is less panic and more insight?

Marcus Breton assures readers that “whether the Kings ultimately move or stay, it's time that Sacramento embraces an undeniable truth: None of the turmoil surrounding the team is the fault of this community.” It’s all the fault, the ham-fisted local columnist tells us, of the team’s owners, the equally ham-fisted Maloof family. If that is so, why did the Kings fail to prosper, either on the court or as a business, during the tenure of the prior two owners?

Should the Kings leave, Phillip Reese reports, Sacramento would be the second largest metropolitan area in the nation without a major-league sports franchise, after only the Inland Empire area of San Bernardino and Riverside.

That’s a nice factoid but it raises the obvious question: Why? Pro sports teams are businesses. Leagues locate their franchises in the places where they are likely to yield the greatest revenue and profits. Is there something about Sacramento that explains why it has such a hard time supporting the Kings?

The Bee used to know and report the answer. NBA franchises draw a large share of their arena revenue from corporate sales. But Sacramento, its economy dominated by state government, is the weakest market when measured by the number of local firms able or willing to shell out for season tickets and luxury boxes. The area’s median household income is far below that of metropolitan areas on the coast, home to California’s other pro sports teams, or of Seattle, and its growth is hampered by its mediocre level of educational attainment. Those weaknesses, which have plagued the franchise since it moved to Sacramento in 1985, have been compounded by the effects of the Great Recession. The popping of the housing bubble and cuts in state government dealt a double blow to the region, which lags far behind most of the country in recovering lost jobs.

The uncomfortable truth that Breton and others at the Bee evade is that the Kings story is part of the larger story of Sacramento’s economic shortcomings and leadership failures. The area is a lousy market for delivering revenue to an NBA team, and its governments are in deep fiscal trouble and in no position to subsidize the franchise. A newspaper devoted to tough journalism would be telling that story, not whining and pointing fingers.

The Shadow Government of Kevin Johnson

In 2008 I ran into Kevin Johnson, the former NBA basketball star, at a restaurant near his condo in midtown Sacramento. I congratulated him on advancing into the runoff in his campaign to oust then-Mayor Heather Fargo. He thanked me, and then asked if I had any advice.

I replied that the most important skill in politics was being able to say “no” to the people funding his campaign. As I spoke, Johnson winced, as if having gas pains. “But they all want something,” he moaned. “Sure they do,” I said. “But remember what the great Jesse Unruh said. ‘If you can’t eat their food, drink their booze, screw their women and then vote against them, you have no business being up here.’”

In a terrific bit of reporting at Sacramento News & Review, Cosmo Garvin makes clears that my playfully offered advice was not heeded.

As Sacramento’s mayor, Johnson has built a shadow machine of nonprofit front groups funded through large and often undisclosed contributions. Although figures at Sacramento City Hall have long had ties to state government and the Legislature—former mayor Phil Isenberg was a legislative staffer, Fargo was a parks bureaucrat—Johnson is the first to tap so heavily into the assembled hordes of lobbyists, consultants, liars for hire, and fund-raisers who have infested the capital city as a result of the Prop 13 centralization of power in California. In fact, it is hard to know for certain whether Johnson formed what Garvin calls KJ Inc. to advance his political fortunes and whether KJ Inc. has latched on to him as a way to generate fat paydays for themselves.

Whichever may be the case, the strategy has worked. The four years of Johnson’s tenure as mayor has been the worst of times for Sacramento. Its economy is among the worst performing in the nation, public safety is being cut in the face of one of the highest big-city crime rates in the country, foreclosures have been rife, and the city budget, burdened with outsize pay and pensions for cops and firefighters, faces a large structural gap. Yet Johnson has done little to nothing on the housing front and has declined to pursue the full-court press for pension reform such as that pushed by San Jose Mayor Chuck Reed. Instead he devoted his attentions to a clownish pursuit of building an arena for the equally clownish NBA Kings franchise. A failure in every respect, he nonetheless had built so formidable a money and institutional machine around him that no serious candidate was willing to challenge him for reelection.

So I’m changing my political advice. To wannabe politicians: Don’t worry about being good, just try to look good.

Sports Extortion (Cont'd)

The Sacramento Bee asked me for my take on the question of whether Sacramento ought to spend $200 million to subsidize a new arena for the Sacramento Kings and the National Basketball Association. You can read my answer on the Bee’s site.

The Bee gave me only 800 words, so I wasn’t able to flesh out the argument as well as I would have liked. Fortunately, we have the web for that.

If you want to understand the economics better, you can check out the longer reporting piece I wrote for the Bee when I worked there. The most accessible book on the subject is Neil deMause and Joanna Cagan’s splendid Field of Schemes: How the Great Stadium Swindle Turns Public Money into Private Profit. Neil deMause also runs a companion web site, Field of Schemes, where he tracks and analyzes the money grabs of welfare-seeking sports owners around the country.

Given more space, I would have also repeated what I wrote here last spring: The best way to limit the extortion game is for the California Legislature to prevent the billionaire sports owners and their leagues from playing city against city. It should ban any local jurisdictions from using public funds to subsidize professional sports teams.

California is at a critical moment on this issue.

The extortionists are on the attack right now all over the state: Sacramento, San Diego, Santa Clara, Anaheim, Los Angeles. But as we all know, from the news and daily life, core California public services reducing the state’s quality of life. Every public dollar extorted today steals from California’s future.

Ideally, local politicians would do the right thing. But there’s something about sports that makes them go weak in the knees and soft in the head. (My wife blames it on testosterone poisoning.) They need to be saved from themselves with a law that protects them against their worst instincts.

That law would set budget priorities right at a time when we need to be putting first things first. But it would also send a bracing message to the rest of the country. If California cities, home to one in eight Americans, can no longer be used as leverage in the extortion game, other states will gain some protection, and perhaps even be encouraged to protect their taxpayers as well as California does.

Contrary to the moans of the extortionists, that wouldn’t mean the end of pro sports. As Scott Lewis points out, at Voice of San Diego, we would then be on track to replace sports socialism with true sports capitalism. And who can disagree with that?