Glendale Busts Its Budget and Plans to Raise Taxes

How do you close a $35 million budget gap? Perhaps the better question is why that hole was dug in the first place. One answer for the City of Glendale is hockey. In fiscal year 2012, the city added $20 million (up from only $1.2 million the year before) to its operating budget for the Jobing.com Arena, where the Phoenix Coyotes hockey team plays. The NHL has been demanding financial support from the city since 2009, when the team filed for bankruptcy.

Instead of looking for ways to cut arena operating costs, city officials are considering a 0.8{010c6536f15f83a69f09c4467fdfb4a5656804feab27fe0dec71ed1e80da306f} increase in the sales tax. This would give Glendale the highest sales tax rate among major U.S. cities.* It would also be enough to cover the $20 million city payment for Coyotes hockey next year.

In other cities, like Oakland, taxpayers don’t pay high dollars for someone else to manage their arena. Instead, professional management groups compete for that right. Arena management can be a profitable business, with groups maximizing concert and other entertainment events and keeping the revenues from concessions and ticket sales. Meanwhile, cities benefit because they don’t have to pay the operating costs. In some arena contracts, like the Sprint Center in Kansas City, the city also gets a cut of the profits. Last year, arena management added $1.8 million to Kansas City’s budget.

A few million dollars in the door would be a well-needed substitute for $20 million going out of Glendale for its arena. We have yet to see city officials open bidding for management. Given the heavy competition for it in other cities, Glendale should consider that option before asking taxpayers to cough up more sales taxes and for another year of hockey.

Learn more:

Goldwater Institute: Goldwater Institute v. City of Glendale

Arizona Republic: Glendale Budget Looking Bleak

Associated Press: No Team, No Problem for Kansas City’s Sprint Center

* Originally, this sentence read, “This would make Glendale the city with the highest sales tax rate in the nation.” It has been edited to clarify that it would give Glendale the highest sales tax rate among major U.S. cities. Also, a link to the source information was added.