The Boston Globe
Friday, November 15, 2002
City, state jockey over DNC costs
$17.5m needed in public funds for convention
By Corey Dade and Rick Klein
Globe Staff
Despite basking in the afterglow of Boston winning the right
to host the 2004 Democratic National Convention, city and state leaders quickly began wrestling yesterday over how to
split the public's share of the expenses.
The city, which is leading the organizing effort, has yet to
say how much it will contribute to the $49.5 million convention budget, insisting instead that it expects to share the burden
of coming up with $17.5 million in public funds with the state, and probably also the
Massachusetts Port Authority and the MBTA.
But some state officials, while acknowledging the state's
expected role in providing public safety and transportation, said yesterday they are reluctant to commit funds to an event
that will primarily benefit Greater Boston.
Governor-elect Mitt Romney said in a morning interview that
he wants to make sure the state can recoup any investment it makes in the convention. In the afternoon, he called Mayor
Thomas M. Menino of Boston and told him he wants to review the city's economic
projections carefully before deciding whether the state would be getting its money's worth.
"I don't believe in corporate welfare. I certainly don't
believe in political welfare either," Romney said. "When I look at situations like this generally, I don't look to the
taxpayers to subsidize corporate or political enterprises. We should look at this in a very clear and
thoughtful way, and make sure that the economics make sense for our community."
No matter how much it contributes, watchdog groups say the
state will receive most of the benefits because it takes in most of the tax revenues from convention-related business. The
city, they say, could end up contributing far more in services, such as police protection, than
it receives in tax revenue.
Menino nonetheless said that he is confident Romney will
provide whatever support is needed and that he hopes to begin more formal discussions with him in about a week. He
said security, which the city has budgeted to cost $10 million - an amount critics say is not
enough in the post-Sept. 11 era - is a critical issue on which the city and state must
compromise.
"Every message I get is that he wants to be working
alongside us on these issues. I'm encouraged," Menino said after talking to Romney yesterday. "These are issues he knows
about since he did a successful Olympics."
But legislators warned that they, too, would have to be
consulted on a financial package to cover the convention.
With most conventioneers expected to stay at hotels within a
25-minute drive of the FleetCenter, the site of the convention, state lawmakers from districts outside of that radius
are less inclined to support the state footing a major portion of the bill, leaders said.
Senate Ways and Means Committee chairman Mark C.
Montigny, a New Bedford Democrat, said with the state facing a $2 billion
budget gap in the next fiscal year, there may be little appetite in the Legislature to bankroll an economic development
project that benefits businesses in Greater Boston almost exclusively. The city's proposal predicted the
convention would stimulate $150 million in economic activity, and the $17.5
million represents less than 1 percent of Boston's annual budget.
"Never lean on someone who's on wobbly crutches," Montigny
said. "The primary beneficiaries will be those that are within the city and the surroundings closest to the
production. It sounds nice for the state, but in this climate, if you don't
have the money to put up front, you can't sit and wait to have the investment pay off down the road."
In fact, the payoff to the state will be virtually immediate, according to watchdogs and those
in the tourism industry. The sales tax and the income tax, expected to come
from the jobs created by the convention, go directly to state coffers. The state also gets up to twice as
much in hotel tax revenue as the city receives.
Unless the ratio changes, the city won't receive enough tax
revenue to pay for its convention costs, says Samuel R. Tyler, president of the Boston Municipal Research Bureau. "The
problem is that as Boston moves into becoming a convention city it really doesn't have the
right tax mix to make that work as in other cities," he said. "The city is going to have to rely
on some arrangements with the state."
One attempt to give cities a larger revenue stream failed
earlier this year when Acting Governor Jane Swift vetoed a bill to raise the sales tax by 1 percent. Boston city officials
estimated the measure would have brought in an extra $15 million annually.
There is some concern that city taxpayers could be left
assuming more of the bill than what has been projected, if the Democratic convention in 2000 is any indicator. A report by the
National Taxpayers Union, a Washington-based nonpartisan watchdog group, revealed that
the city of Los Angeles's bill went from no estimated costs to $8.3 million shortly before the
convention, and finally rose to $36 million.
"Very clearly there is a precedent for costs to spiral out
of control," said Peter Sepp, of the National Taxpayers Union. "What do you do when weeks before the convention you're
presented with sticker shock? You're almost certain to go along with it. Of course, the
problem is the convention price tags seem to be getting bigger as well. And what is Sept. 11
going to do to escalating security costs?"
One possibility, city officials said, is that the federal
government could designate the convention as a major national event, which would shift security oversight and some costs to
the US Secret Service.
Already, Menino and Boston's convention planners have
secured $20 million in commitments from private donors. Boston also expects to collect $12.5 million in in-kind contributions.
But that still leaves the $17.5 million to be raised from some combination of government
agencies.
As to the projected benefits, Tyler said it is difficult to
assess the city's estimate of $150 million. The prediction that 2,000 jobs will be created and will spur the economy, for
instance, is misleading because most of the positions will be temporary.
"I can't say that it's off the mark, but you have to be real
careful as ... to what's real," Tyler said. The projection "probably is high, but there is some reality to it. There is
some economic benefit to it, whether it's $150 million or $100 million."
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The Boston Globe
July. 29, 2000
Corporate cash fuels parties at conventions
By Glen Johnson
Globe Staff
In most cases, corporations are sponsoring lavish parties,
with tax-deductible donations, aimed at influential lawmakers and party figures. They are also kicking in the goods, from
400 cars courtesy of General Motors to pagers from Motorola to 21,500 gift bags from
Verizon Communications, the wireless communications giant formed by the merger of Bell
Atlantic and GTE....
Fueling the money flow is the rising cost of conventions and
changes in fund-raising laws that allow the donations. Each party is expected to spend over $50 million on its gathering,
up from $30-35 million in 1996. The Treasury Department provides $13.5 million to both the
Republicans and Democrats for their conventions, and in most cases the local government
kick in a share. In Philadelphia, the city and the state of Pennsylvania have donated $7 million
in cash and millions more in services.
That leaves a money gap, one that corporations have steadily
filled following a 1984 change in corporate-giving laws.
Convention financing came under scrutiny in 1972, when
columnist Jack Anderson uncovered a memorandum written by a lobbyist, Dita Beard, that suggested ITT Corp. had
committed $400,000 to the 1972 Republican National Convention in return
for having the Nixon administration settle an antitrust case against the company.
After Watergate, Congress passed a host of fund-raising
reforms, including one that banned corporate underwriting of conventions. In its place it instituted public financing of
conventions. In 1984, the government loosened the regulations by letting convention host
committees accept unlimited corporate donations.
The gifts were also made tax deductible, since they were
considered marketing expenses. The donors had to be disclosed, but not until 60 days after a convention. Today, with a
booming economy, the floodgates have opened.
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