By Aaron Reiss
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If Houston or Dallas vaults ahead of six other U.S. cities bidding to host the 2012 Olympic Summer Games, it has the Texas Legislature to thank -- or blame, depending on one's perspective.
The United States Olympic Committee is smiling down on the two cities because Texas is well on the way to becoming the first state to acquiesce to its demands that the games be backed with a generous financial guarantee. The Legislature is ready to pledge as much as $100 million in taxpayer money that could be lifted from the state and host city and diverted to the International Olympic Committee in the event the games end up in the red.
Before any taxpayer money could be set aside, however, local voters would have to approve a referendum -- one of several protections legislators folded into the bill. The legislation requires the local Olympic organizing committee to disclose its contributions and expenditures and to provide public access to its meetings and documents. Just for emphasis, lawmakers also incorporated the state's bribery statute into the bill.
Some of the folks who are all tingly at the prospect of bringing the Olympics to your fair city already are in the campaign mode even though an election would be a couple years away. They want to divert you from the possibility that the games may be subsidized by taxpayers and instead want you to consider the chance as "slim to negligible" that even one public penny would ever have to be spent.
"This legislation is not really intended to be a mechanism for funding the games," says George DeMontrond III, chairman of the Houston 2012 Foundation. "It's to satisfy a technical requirement."
The shrewd plan to satisfy the USOC requirement, however, looks an awful lot like a mechanism to provide some public financing for the Olympics. The bill sets up a trust fund, capped at $100 million, that would siphon state and municipal sales tax revenues directly connected to staging the games.
Think of it as a $100-million insurance policy for the IOC, which fronts a host city billions of dollars to present the games. If the local organizing committee couldn't pay back the IOC, taxpayers would. If the local committee can reimburse the IOC, then the stash returns to the state and city. The IOC would like an unlimited financial guarantee instead of one capped at $100 million, but DeMontrond says, "no one thinks that is politically doable."
It takes a lot of guesswork to assess the chances of whether the games can make or lose money. One thing is clear: The Olympics are volatile and therefore risky. A world crisis, for example, can disable the games as quick as you can say Slobodan Milosevic.
Under the Texas plan, the state comptroller would determine what revenues would be considered Olympics-related and therefore packed away into the trust fund. If Houston or Dallas gets the games, shortly thereafter the comptroller would compare the actual tax revenues from the city to revenue estimates of what they would have been had the Olympics not come there. Other direct economic effects would be included.
The office's preliminary estimate is that $63.8 million in sales tax revenues could be diverted into the fund from the time the games are awarded to three months after the torch is extinguished. That calculation assumes a $3.5-billion total estimated economic impact from hosting the games. James LeBas, the comptroller's chief revenue estimator, predicts that the comptroller would be conservative in determining amounts for the stash fund.
"Our bias, if we have one, is to protect the financial interest of the entire state," LeBas says. "These are state dollars at stake for what some people consider primarily a local project."
As bill supporters see it, the Olympics almost assuredly won't run a deficit. The trust fund would contain only tax revenues that come from hosting the Olympics and therefore include money the state and city would otherwise never earn, they say. And they argue that the vast majority of Olympic-related tax revenues would come from out-of-state visitors.
"It's heads, the state wins and tails, it still doesn't lose," DeMontrond says. Richard Schultz, USOC executive director, told the Houston Press that the public guarantee will be a major consideration when evaluating bids. He considers the Texas legislation "kind of the ideal model."
While it's too early to say that certain bid cities have an advantage over others, "the cities that can deal with this in a positive way, that's certainly going to help them," Schultz says. "It's certainly a plus for Dallas and Houston and San Antonio."
San Antonio? You bet. In fact, Houston and Dallas have San Antonio to thank -- or blame, depending on one's perspective -- for impressing the USOC.
San Antonio, suffering from its own case of starry eyes, is bidding for the 2007 Pan American Games, the poor bloke's version of the Summer Olympics. The Pan Am Games, which also are under the USOC and IOC, attract about 5,500 athletes from Western Hemisphere countries competing in 40 sports. The last U.S. city to host those games was Indianapolis in 1987, so the U.S. is due. San Antonio likes its chances against North Carolina and south Florida, the only other national bidders.