Highlites from the Senate

Last week in my newsletter I mentioned an innovative new idea for financing a proposed race-car track in Newton. The measure was voted out of the Senate Ways and Means committee this week and is now awaiting debate on the Senate floor. Some have expressed concern that this is bad tax policy, but I do not share that view.

The legislation would allow the owner/operator of the Newton Motor Speedway to retain up to $12.5 million in state sales tax that customers would pay for tickets, concessions and merchandise.

Officials with the Newton Motor Speedway estimate the facility will generate $1.1 million in sales tax revenue each year with the total dollar impact of annual operations reaching $67 million. The race track is expected to create 50 full-time jobs and up to 500 temporary jobs during racing events.

Supporters of the bill point out that the Newton race track will generate significant economic opportunity for Iowa. Car racing has become an increasingly popular sport and having a race track of this caliber will attract numbers of race fans from outside the state.

More importantly, the proposal won’t cost the state any money up front because revenue from the track is not currently flowing into the treasury. While the state would forgo the initial $12.5 million in sales tax revenue, it would collect sales tax revenue on the increased business race fans bring to area motels and restaurants. Once $12.5 million is collected by the track, the additional sales tax would go directly to the state.

I do think this concept warrants a closer look. While it is a departure from the norm, it could be a novel way to stimulate economic growth and development. If this proposal is approved, we need to look at setting parameters and guidelines for any similar requests in the future.