Don't Mess With Taxes

After four years without a U.S. Formula 1 race, there soon will be two. Maybe.

In May 2010, the FIA announced that starting with its 2012 season the Formula 1 United States Grand Prix will be run in Austin. The deal calls for F1 races in the Lone Star State through 2021.

Now comes word that in 2013 there will be a second U.S. F1 race. The Grand Prix of America at Port Imperial will be held in New Jersey. That event also has a 10-year contract.

And this second U.S. race has given new hope to Texas taxpayers who want to red flag the proposed $250 million in state money slated to go to the Lone Star race.

Artist rendering of Austin Formula 1 track courtesy Circuit of the Americas

The State of Texas has pledged to contribute $25 million a year for 10 years from the Texas Major Events Trust Fund to support the Austin F1 competition. The money would be repaid from tax revenue the race generates.

The guidelines for dispersing the state funds require that the recipient event can't be held more than one time in any year. That would make 2012 OK, but what about 2013 when there would be two F1 races in the United States?

"The New Jersey race has no bearing on the Austin race," Brooke Botello, a spokesperson for Texas Comptroller Susan Combs, told the Austin American-Statesman. The rules regarding fund money would apply only if a similar event were held in Texas, said Botello.

Bill Aleshire, an Austin attorney and opponent of the race subsidy, disagrees.

Aleshire has sent Combs a letter stating that should there be a second F1 race in America, F1 would be "disqualified from receiving the $250 million in tax kickbacks from Texas. By our state law, the Texas tax kickback is available if Texas has the only F1 U.S. Grand Prix."

Without the state money, some speculate that Austin's F1 plans could stall and perhaps be scrapped completely.

A legal challenge to using state money for the race was filed when the date of the Texas F1 was up in the air. It subsequently was withdrawn.

However, the plaintiffs asked the Travis County judge to leave open the possibility that the suit could be refiled if different legal arguments are put forward.

Is that the scribbling of law office staffers putting the finishing touches on a revised court filing that I hear?

Meanwhile, New Jersey F1 promoters note that their race won't require any public funding.

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