Convention center expansion effects remain a question

It’s a mantra that resurfaces every few years when it comes to our city’s convention center: It’s too small; not enough room; we have to keep up with the other Midwest convention center spaces. Literally from the day it opened, the building known as the Midwest Airlines Center has never seemed to satisfy those who run it or those whose livelihoods depend on it, namely Wisconsin Center District Chairman Frank Gimbel and tourism bureau (Visit Milwaukee) chief Doug Neilson.

Gimbel, as head of the Wisconsin Center District -- which is allowed to collect taxes from hotel rooms, rental cars and food and booze from city restaurants to run the convention center, the Arena and the Milwaukee Theater -- has never met an expansion he didn’t like. He led the fight to get the district to remodel the old Milwaukee Auditorium for $40 million-plus into the Milwaukee Theatre, which now sits largely empty during the year.

But since opening in 1998 with 189,000 square feet of exhibit space and a 37,000 square-foot ballroom, Midwest Center operators have been pounding the pavement looking for support to build a 150,000 square-foot addition with a price tag between $150 million to $200 million. The center was built for $175 million. Gimbel and Neilson take the keeping up with the Jones’ approach, noting that other Midwest cities, even Cincinnati and Columbus, Ohio, have bigger convention centers than ours.

The arguments for expansion were floated almost as the gates of the convention center were opened. In 2001, Gimbel and Neilson said the expansion had to start in 2002 for the city to keep up. Of course, not many took the bait. After all, the building had barely been open and its operators were already arguing that it was obsolete. It wasn’t exactly the best way to tell taxpayers their money was being used with the utmost of wisdom. Taxes supporting the district were raised in 2002 for the purpose of expanding the center. But it never happened, yet the taxes did not go down. Since then, the murmurings for growth have been kept low-key, mainly due to the questionable remodeling of the Auditorium and its price tag. The Center’s Web site, however, promises a 100,000 square-foot to be completed in 2005.

For now, Gimbel and the district -- with the strong vocal support of Neilson and VISIT Milwaukee -- are looking to spend between $75,000 and $200,000 to study an expansion. Their number one discussion point is that the convention center has an irreplaceable economic impact on the region. In 2002, they said the expansion would bring and additional $104 million a year to the city.

But convention centers have long overstated their economic impact, say economists like UW-Milwaukee’s Marc Levine, who looks at this stuff for a living. Indeed, as the Midwest Center was being built, planners argued that it would bring an immediate economic impact of $100 million to the area. Economists, however, said at the time that figure would be more around $60 million. In 2002, VISIT Milwaukee, using the same math it came up with for the $100 million figure, estimated the economic impact of conventions at $150 million.

Convention centers also overstate their job creation potential, Levine notes in more than one study. After the Midwest Center opened, convention bookings actually went down compared to previous years when the city was saddled with its boring, yet functional, MECCA. And the Milwaukee convention business has yet to equal its 2000 performance.

It’s for these reasons that expanding the convention center never really got the support from former Mayor John Norquist, who felt public funds should be used more for infrastructure work to help the private sector settle in and create jobs. Mayor Tom Barrett’s public comments so far seem to be more tempered about the idea than his predecessor. The mayor’s office said it would reserve comments until the study was completed.

Norquist was more direct. “There’s no economic evidence that building these big buildings Downtown helps. I don’t know that that’s a really great move,” he said in 2003.

The only way to pay for any expansion would be through the taxes the district is allowed to levy, placing some Downtown players straddling a line on where their business interests lie. For instance the Marcus Corporation, which owns three Downtown hotels, recently sent a letter to Mayor Tom Barrett’s office saying the city shouldn’t subsidize hotels, but put money into public projects to bring tourists to town. But when faced with an increase in their room taxes, Stephen Marcus said the tax should be expanded to include the counties surrounding Milwaukee County so that his hotels don’t become part of a tax island.

Fire Helps Port Record: Officials at the Port of Milwaukee were popping corks over reports that the port may have set a record for shipping in 2006. Shipments went from 3.7 million tons in 2005 to 3.8 million tons in 2006. The port’s success last year featured grain ships as nearly permanent fixtures in the harbor all summer. Grain shipments rose 85% last year, but nowhere in the media reports or port press releases were any reasons given for the sudden surge in grain shipping. It seems a fire damaged a major Toledo grain elevator rendering it useless for 2006 and that caused grain shipments to be diverted to Milwaukee. Not exactly a feather one can put in the performance cap.

The port also received recognition for being the fifth-ranked point of origin for shipments through the St. Lawrence Seaway. The port claimed a 99 percent increase in sailing 700,000 tons of stuff through the St. Lawrence over 2005 -- second most in the Great Lakes -- even though in 2002 that figure was 638,000 tons. Even though Milwaukee benefited from Toledo’s misfortune, it still ranked third in grain shipments on the Great Lakes, behind Duluth and Toledo. Milwaukee’s port sends significantly fewer ships to sea than Toledo. Toledo moved about 10.7 million tons through its port in 2005 and shipments rose 6.1 percent in 2006.

Tax Hell or Tax Smell: It’s that time of year when most everyone bemoans paying taxes. But two reports out this week take a decidedly different tact in attacking the taxman. While we expect the annual cries from state big business that Wisconsin’s tax climate is akin to hell on earth, the Institute for Wisconsin’s Future found that corporate Wisconsin was paying some $1.3 billion less a year in state and local taxes compared to other states. The IWF found that in 2006 Wisconsin corporations paid about 35 percent of all state taxes, considerably less than the share for corporations in the rest of the country, where the average is 40 percent. In local taxes, corporate Wisconsin pays about 47 percent of the share, compared with about a 52 percent average nationwide. As the IWF puts it, “as a taxpaying partner in supporting state and local services, Wisconsin’s corporate sector ranks 41st among all the states ... a bottom ten ranking that should embarrass corporate leaders.”

Alaskan corporations lead the country in paying a share of state and local taxes at 82 percent -- by far the highest -- with South Dakota second at 64 percent. Connecticut is the lowest at 34 percent and Oregon No. 48 at 36 percent.

For Wisconsin’s big companies -- of which nearly 62 percent did not pay income taxes in 2003 -- the share of tax contribution has been on the decline since the early 1970s. Then, homeowners paid less than half of all property taxes. Now that figure is 70 percent. 

But figures like that don’t stop Wisconsin Manufacturers and Commerce from crying their annual crocodile tears over the state’s tax burden. But WMC chooses as its moaning point-not corporate taxes -- but residents’ overall taxes. It cites a study by the Tax Foundation that points out Wisconsin ranks seventh in the country in terms of state and local taxes as a percentage of income. WMC says it would like Wisconsin’s ranking to be No. 11, even though that has never happened since 1970. In fact, since 2002, when Jim Doyle was elected, the state’s ranking dropped from No. 4. When including the federal tax burden, Wisconsin ranked No. 13, with 33 percent of income going towards taxes.

Smoke Ban Snuffed: An effort to ban smoking in Dunn County public places has failed. A committee voted 5-3 to kill the measure. One board member said the goal of public health is to educate, not to legislate. “We legislate much more in the United States than our founding fathers envisioned,” she said. Another was quoted as saying there had not been any public outcry for the ordinance. He also worried about business owners losing the freedom to regulate themselves.