State seeking Plan B for e-pulltabs, Vikings stadium funding

Legislators are beginning a hard-nosed search for alternatives to electronic gambling to help pay for the planned Minnesota Vikings stadium, even as team officials met with state officials Wednesday to strategize about how to get more people playing the new barroom games.

They are being spurred by the feeble rollout of new electronic pulltabs games, which were to cover the state's share of the $975 million stadium in downtown Minneapolis. Gov. Mark Dayton's aides met with Vikings officials in private on the topic while in public, House Taxes Committee Chairwoman Ann Lenczewski, DFL-Bloomington, promoted a once-discarded idea: Taxing pro jerseys and foam-finger sports memorabilia.

The tide appears to be turning away from a wait-and-see attitude — hoping that e-pulltabs catch on — and toward taking direct action to fix the problem in the less than six weeks remaining in the 2013 legislative session.

"Minnesotans are tired of the stadium debate," Lenczewski told her committee. "The project is moving ahead. We should act to solve it now."

Initially projected to bring in $34 million by the end of this year to cover the state's share of stadium costs, electronic pulltabs and bingo have been slow to ramp up and revenue projections have plummeted to $1.7 million. After first counseling patience, Dayton said this week that a fix will be approved this year, and his office has been holding meetings soliciting what an aide called a "potpourri of ideas."

Judging from Wednesday's discussion, no fix will be easy.

Lenczewski formally revived an idea that was originally included in the 2012 Vikings stadium bill but was dropped along the way. She would apply a 10 percent tax on wholesale sales of professional sports memorabilia, no matter where it is sold — whether at a pro stadium or at Target. The tax would also be levied on rentals of stadium boxes and suites. It is projected to bring in more than $12 million per year — a little more than a third of what the state needs.

The committee laid the bill over without a vote, meaning it could resurface in a larger tax bill. GOP critics on the committee joined the state's four pro teams — the Vikings, the Timberwolves, the Twins and the Wild — in opposing the idea.

"We're opposed because this legislation fundamentally changes the agreement the Vikings negotiated with the state of Minnesota," Vikings Vice President Lester Bagley said. He described the team's contribution of $477 million as considerable and said the Vikings do not believe they should pay more.

But Michele Kelm-Helgen, who leads the Minnesota Sports Facility Authority, which is charged with building the stadium on a tight timeline, praised the memorabilia tax. She noted that it was part of the stadium agreement last year until late in the legislative debate, when she was a top Dayton aide working to pass the bill.

"Having a source of revenue like that would probably be a good thing," she told the committee. Kelm-Helgen said that without additional funding, "there could be a shortfall" when the first bond payments come due in late 2013 or early 2014.

Republican members expressed fears that if gambling revenues don't pan out, the stadium contribution will come out of the same general fund that pays for schools and nursing homes.

Bagley said the team met with the governor's staff to focus on ways to make last year's agreement work — not on ways to find new sources of revenue.

"We're willing to step up with help on the marketing side and try to get the pulltab operation a little more traction," he said, "but fundamentally we can't alter the deal that we struck last spring."

A series of private meetings in Dayton's office have centered on how to strengthen the marketing for e-pulltabs and whether other gambling or tax options should be considered.

"Right now it's a potpourri of discussions around what we're going to do, one, to make this current solution that we have out there successful, and, two, if we need to go somewhere else, where is that going to be," said Bob Hume, Dayton's deputy chief of staff.

Sen. Julie Rosen, R-Fairmont, sponsor of last year's Vikings stadium bill and co-chair of a legislative commission overseeing the stadium project, said her focus is on making e-pulltabs work. "Have you seen any billboards, any signs outside the establishments?" she said.

"We do need to come up with a backup plan, something solid, and credible and reliable, that we can sell bonds with," he said. The bond sale is set to occur in August, and Atkins said the backup plan should be in effect before then.

He said the issue will be "too white-hot of a political football" to sell bonds "without an honest-to-God source of revenue, a reliable source of revenue, that will pay for it."

Rep. Dan Fabian, R-Roseau, who voted for the stadium bill last year, along with other GOP House members, introduced a bill that would lower the state's contribution from $348 million to $148 million and reduce the bond sale accordingly. He said he is frustrated by the way the stadium package was sold to legislators and wants to ensure that the state's general fund is not tapped.

"If we leave here on May 20th and we haven't addressed this, that's being irresponsible," Fabian said.