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Looks like the Texas tax payers are at risk of getting taken by close to 1/4 billion dollars...
From the comments section on the article:
Richard Viktorin 2 weeks ago
Thank you Christopher Helman and Forbes editors for this story.
In late December 2010, Audits in the Public Interest opened a case file on Formula One and the incentives it was seeking from the State of Texas. In the ensuing months, our investigation disclosed that Texas Comptroller Susan Combs had padded the economic impact study prepared by her agency for Formula One.
The cumulative errors and exaggerations and flawed application of state tax law – by the Texas’s chief revenue and tax compliance officer no less – were put in full public view during presentations before the Austin City Council in June 2011. Consequently, Austin declined to fund its $40,000,000 share of the incentive (essentially a smaller match of the state’s quarter billion dollar deal with Hellmund and Ecclestone).
Our investigation also uncovered a certification letter in which Comptroller Combs promised to pay Bernie Ecclestone and Formula One $25 million a year for ten for a tidy total sum of one quarter of a billion dollars. The ten year certification was contrary to law.
As a plaintiff in the lawsuit to stop Comptroller Combs from making illegal payment, we were pleased she chose not to make the first advance payment thereby tapping the brakes on the incentive until the race was over and attendance and economic benefit were more certain.
We persist in our belief that Comptroller Combs was breaking the law and betraying her office and the taxpayers of Texas to which she swore an oath. The law is clear that the incentive is based on the increase in economic activity from the race. Austin’s Leisure and Hospitality sector, in the fall, was already 90% utilized before Formula One. None-the-less, the Comptroller’s calculation and payment to F1 assume zero utilization in Austin’s lodging industry before F1. This effects a direct diversion, without benefit to the Texas economy, of over $200 million in state general revenue into the coffers of Formula One . Formula One does not deserve an incentive which is based on economic activity which existed before its entry into the local market.
Looking at the deal more broadly, and though buried in finance layers and complex corporate structure, we strongly believe Comptroller Combs has chosen to deliver a quarter of a billion dollars to build Epstein McCombs Investors a special purpose sports and entertainment facility. Moreover, the combination of facts and cumulative circumstances leads us to believe the subject payments are crony pork dressed up as economic incentives.
Richard Viktorin
Audits in the Public Interest
Austin, Texas
T9
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