Texas Official Taps the Brakes on Formula 1 Racing
by Ross Ramsey
The state won't spend any economic development money on Formula 1 races in Texas in advance of those races, Comptroller Susan Combs announced this morning.
Combs, who's been way out in front promoting Formula 1 racing as an economic draw for Austin and Central Texas, says she's concerned about plans to hold races in New Jersey. More events in other states could diminish the economic advantages of holding races in Texas. And she said, via written statement, that the state will do more economic analysis before it spends any money on the races.
The Legislature already authorized spending $25 million annually for up to 10 years to subsidize Formula 1 in Texas. None of that has been spent, according to Combs, and none will be spent in advance of a race. Promoters are building a track between Austin and Bastrop and hope to hold races starting next year.
The United States Grand Prix could be held in Texas a year from now, and then in New Jersey in 2013. Formula 1 officials cast doubt last week on whether the Texas race will take place.
Combs' announcement means the state won't spend taxpayer money on the track here until that's sorted out. How her position will affect plans for the track isn't clear. But it could get her out of a political mess; opponents have been critical of her willingness to invest state money in the private venture in a period of tight budgets and a down economy.
Here's her full statement:
It’s no secret that I’ve supported Texas hosting a Formula 1 race since 2008. I believe a well-organized event of this magnitude can be a tremendous benefit to Texas if done right. Investors, businesses and event organizers want to come to Texas because we’ve developed an economic climate that is attractive, our state is a great location for events, and we’ve got space and potential to grow.
A tool for recruiting large events to the state is the Major Events Trust Fund (METF), which was created by the Texas Legislature in 2003. In the past two years, eligible METF recipients have included the NFL Super Bowl XLV, the NBA All-Star Game and the NCAA Men’s and Women’s Final Four tournaments. The support provided by the METF comes from sales, hotel, beverage and other tax revenue generated by out-of-state visitors who attend the event.
When the United States Grand Prix was formally announced, it was the only Formula 1 race scheduled in the U.S. During the past 18 months, organizers have taken many steps to bring high-profile motor racing to Central Texas, including the development of the Circuit of the Americas, and the announcement of the global MotoGP and V8 Supercar race series starting in 2013.
The recent announcement of an annual Formula 1 race in New Jersey is a concern, as additional races have the potential to reduce the number of attendees to a Texas race, thereby decreasing the economic impact. Additionally, the reports of a slowdown in construction at the Circuit of the Americas, and recently publicized disagreements between the race rights-holder and the circuit developers have prompted speculation about whether the Austin race will even occur. The ongoing controversies are a concern and we will continue to monitor them.
“Let me state clearly: We have not paid out any money for the Formula 1 event. The only dollars that can be spent on the United States Grand Prix are tax revenues attributable to the successful running of a race. The state of Texas will not be paying any funds in advance of the event. Further, as is the case with all METF events, each application will be reviewed and analyzed for its likely economic impact and only after the race occurs would any funds be disbursed.
If an METF application is submitted, it will be thoroughly vetted and economic impact data scrutinized based on the actual circumstances for that event. Ultimately, I am responsible for protecting the interests of Texas taxpayers, first and foremost. I will not allow taxpayer dollars to be placed at risk. My position on that has not changed.
This article originally appeared in The Texas Tribune at http://trib.it/w5jDVZ.
