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Making a mogul of a tax mountain

The upcoming Olympics will cost U.S. taxpayers nearly $400 million — not including another $1.1 billion in accelerated federal spending on projects Utahans wanted done in time for the Games. By MSNBC’s Martin Wolk.
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There is sharp dispute over exactly how much the federal government is paying to underwrite the Salt Lake City Olympics, but there is no doubt that for U.S. taxpayers the upcoming Games will be the costliest ever.

A STUDY by the congressional General Accounting Office released in November estimates that federal spending on direct costs associated with the 17-day event will total $342 million, plus an extra $50 million for beefed-up security approved after the terrorist attacks of Sept. 11.

Even before Sept. 11, Congress and federal agencies had committed $185 million for security at the Games, along with more than $100 million to create a temporary mass-transportation system complete with new roads, parking lots and a fleet of buses to ferry athletes and spectators between event venues in the Salt Lake City region.

All told, the investment is far more than the $192 million the U.S. government spent six years ago on the summer games in Atlanta, where three times as many athletes competed. When another $228 million in state and local funding is thrown in, taxpayers are lavishing $177,000 on each of the 3,500 athletes who come to Utah to schuss and skid across the ice and snow.

InsertArt(1363320)And that is even before accounting for about $1.1 billion in accelerated federal spending on Utah highways, bridges, a light-rail transit system and other public improvements that local officials wanted to complete in time for this month’s Games.

“It’s really obscene,” said Sen. John McCain, R-Ariz., one of the few in Congress to publicly criticize Utah’s pre-Olympic gold rush.

“It’s one thing to rip off the taxpayers for a billion and a half, but then you also enrich developers for tens of millions more through land swaps and building roads for them,” McCain said in an interview with National Public Radio.


In December, an expose in Sports Illustrated described in detail how billionaire oilman Earl Holding worked closely with the Salt Lake Organizing Committee to bring the Olympics to Utah and then used the Games as a lever to win long-coveted National Forest land on which he plans to build an expanded year-round resort and housing development.

Under a deal that was pushed through by Congress despite repeated objections from the Forest Service, Holding got title to 1,378 acres adjoining his Snowbasin ski area, site of the downhill and other alpine skiing events at the upcoming Games. In exchange, he gave up 11,757 acres in 21 parcels scattered across northern Utah, most of which is either inaccessible or of little use for anything other than cattle grazing.

In addition the federal government agreed to build a $15 million, 3.5-mile road over mountainous, environmentally sensitive terrain to get spectators to and from the ski area for the six days of competition.

“When I was there in the summer of 2000 they had already begun construction of the road and I nearly cried, it is such incredible wetlands,” said Janine Blaeloch, director of the Western Land Exchange Project, which monitors government land swaps. She said the Snowbasin land exchange is a “poster child” for many similar deals approved by Congress that create the “illusion” of a public purpose but mainly serve the interests of private real estate developers.

“The biggest lie was that it was necessary for him to acquire this land in order for the ski runs to be available for the Olympics,” Blaeloch said of the Snowbasin parcel. “That was a complete fallacy. …. The Olympics were used as a late vehicle to get Mr. Holding the land he wanted.”

Snowbasin manager Gray Reynolds, who was deputy chief of the U.S. Forest Service at the time of the 1996 land swap, declined through a spokesman to comment for this article. But in an interview with NPR, he said the development would benefit the public with its planned golf courses, tennis courts, swimming pools, skeet shooting and horseback riding facilities.

“The intent of all of this is not just for the Olympics,” he said. “The Olympics is really important, but the Olympics will come and go, and this ski area is here for the long term.”


Mitt Romney, chief executive officer of SLOC, which is responsible for putting on the Games, points out that the federal share of the direct costs associated with the Olympics has declined from 50 percent for the 1980 Winter Games in Lake Placid, N.Y., to about 20 percent for the current Olympiad.

“Further, the actual dollars provided for the 2002 Games have merely doubled since Lake Placid and thus have not begun to keep pace with the rapid increase in the costs of the Games,” he said in a letter to the General Accounting Office defending the cost to taxpayers.

Romney added that since he was named to his post in 1999 he had worked to “simplify and reduce the costs of the Games as much as possible,” including keeping the pageantry to a bare minimum.

“In this regard, we have revisited many of the “requirements” of the Games and sought to reverse the trend of having each Olympic Games be “bigger than better” than the one before,” he said.

Members of Utah’s powerful congressional delegation have defended federal spending on the Games as an issue of national pride, although the Olympics technically are awarded to an individual city and not to a country.

“The 2002 Games are America’s Games, not just Salt Lake City’s, and the participation of the U.S. government is not only an appropriate responsibility, but a privilege,” Utah Sen. Bob Bennett said in releasing the latest GAO report.

Needless to say, not everyone feels so privileged.

Pete Sepp of the National Taxpayers Union says the rising federal subsidies should be linked to a corrupt Olympic bidding process that culminated in the Salt Lake City bribery scandal.

“The government should avoid aiding and abetting this process by setting a limited role from the start — a set amount of shared, well-monitored security assistance — and otherwise stay out,” he said. “That way, cities who happen to have powerful lawmakers on appropriations committees working for them won’t have an advantage over other cities that might actually have greater commercial potential and capacity.”

But with four U.S. cities ramping up their efforts to win the right to host the 2012 summer Games, there appears to be little real momentum for any change.

“A lot of people are going to think you’re a two-headed monster if you complain about it,” said Roger Noll, a Stanford University economist who has studied the issue of sports and taxes.

“The cost on a per capita basis is not very much,” he said. “There are lots of frivolous things we do in life, and this is probably one of them.”