Dayton rejects stadium sales tax

Gov. Mark Dayton blew a gaping hole in the financing plan for a new Minnesota Vikings stadium Tuesday, saying plans to put local taxpayers on the hook for a share of stadium costs are not politically feasible.

With just days remaining before the governor presents his own stadium plan, Dayton's decision shifts a sizable share of the cost of the $1.1 billion stadium to the state or the Vikings while also stoking deeper interest in expanded gambling -- including electronic pull-tabs -- as a possible solution.

Dayton said a stadium solution is making progress "because we narrowed it down to real options that are available." He said he and legislators have collaborated and "I feel encouraged by that. I want to see that continue. And if that does continue, we'll get a good outcome for the people of Minnesota."

Dayton and legislative leaders reshuffled stadium negotiations Tuesday by saying legislators will not support any effort to exempt Ramsey County or Minneapolis from their obligation to hold a public vote before increasing local sales taxes to pay their share of the stadium. All parties have acknowledged that holding a referendum probably would have killed the deal.

Vikings spokesman Lester Bagley held a rare Capitol news conference afterward to tamp down speculation that the new twist had killed Ramsey County's site. "Arden Hills is [still] the ideal site," Bagley said.

The Vikings have an agreement with Ramsey County officials to build a stadium in Arden Hills. Under that plan, the state would have chipped in $300 million, the team would have paid $420 million and the county would have kicked in $350 million through a half-cent countywide sales tax.

A grass-roots group of Ramsey County residents upset about the stadium deal were pushing for a referendum, although Ramsey officials had said no such referendum was needed.

Dayton signaled a possible willingness to move off a point he had deemed critical before: having the state kick in more than $300 million he previously said was his maximum.

"That assumed there was a local contribution," Dayton said. "That's not available, so we will have to go to Plan B at this point."

Ramsey County Commissioners Tony Bennett and Rafael Ortega said in a statement Tuesday that they have, from the beginning, "preferred alternatives that would spread the cost of a new Vikings Stadium across broader funding sources."

Bagley was vague on what happens next.

"We'll put our heads together with Ramsey County [and] try to sit down and regroup," he said. Bagley deflected questions on whether the Vikings would pay a greater share of the project. He said the team is already providing the third-largest private contribution to a new National Football League stadium.

Dayton said the latest move "doesn't take either site off the table." But, he said, it does open huge financing holes in any plan that depends on local taxes. He said that while he had hoped to have a special session on the stadium before Thanksgiving, mounting obstacles could move it closer to December.

Without a sales tax, Arden Hills does not appear to have another funding source to cover its share. Staffers for Minneapolis Mayor R.T. Rybak said a second funding option for its share could come from a new casino on Block E.

Rybak spokesman John Stiles said the mayor remains open to the casino if some money would be used to spruce up the Target Center and the Minneapolis Convention Center, and benefit urban American Indians. The stadium would also have to be located in Minneapolis.

But using gambling revenues to fund a major project like a stadium also faces myriad hurdles, ranging from possible lawsuits from tribal gambling interests to the opposition of legislators and others who fear the social costs of increased gambling.

Even if the state boosts its share of stadium costs, it is far from clear where the money would come from. The governor and legislative leaders refuse to use general fund money for a stadium. The state also owes billions of dollars to public schools.

The state would probably borrow money to come up with its share, which means it would need about $23 million a year to pay the debt service on those bonds.

The promise of pulltabs

One idea to which Dayton said he is warming is a proposal that would allow bars to switch to electronic pulltabs, which allow bar patrons to gamble using a handheld wireless device. The Minnesota Department of Revenue has estimated that such a move could yield an additional $40 million a year.

"The electronic pulltabs are the most promising and have the broadest support in the Legislature," Dayton said. "My sense is that's the most immediately available and plausible source right now."

Some Republicans have expressed an interest in tapping the Legacy fund, which is constitutionally dedicated to environmental and cultural programs. DFLers say they would file lawsuits to stop such an effort.

A proposal to allow slot machines at the state's horse-racing tracks, could allow the money to be used in Minneapolis or Arden Hills.

"The governor seems to be moving toward a gaming solution," said Sen. David Senjem, a Rochester Republican who would be the lead Senate author on racino legislation "Taxes was never going to fly. Legacy was never going to fly."

Senjem said racino legislation would raise $133 million annually, enough to help build a stadium and repay money the state borrowed from public schools.

Senjem acknowledged, however, that Senate Republican leaders who control the Legislature are not openly favoring racino. "They've been rather quiet," he said.

Staff writers Eric Roper and Rochelle Olson contributed to this report. mkaszuba@startribune.com • 651-925-5045 baird.helgeson@startribune.com • 651-925-5044