The Glendale City Council passed a 5-year $125 million sales tax increase this summer to address budget shortfalls. Prop 457 is a citizen initiative that would eliminate that temporary tax increase. Glendale City Councilperson Yvonne Knaack speaks in opposition to the proposition. Pat Quinn, former president of Qwest Arizona, speaks in favor of Prop 457.
Ted Simons: Glendale's proposition 457 would repeal a sales tax increase approved by the city council in June. It would also require future tax increases to be approved by voters. Here to discuss the measure is Pat Quinn of save Glendale now, supporting prop 457. He's a former president of Qwest Arizona. Here to speak against the proposition is Yvonne Knaack, a member of Glendale's city council. Thanks for joining us. Pat, why reverse this five-year $125 million tax hike?
Pat Quinn: It's very simple. A lot of people are confused great summary of what it does. It restores it back to 2.2% instead of 2.9 and requires the citizens vote on any future sales tax increases. With that sales tax increase the council put in, Glendale became the highest sales tax of any in the country at this size at 10.2%. We decided we needed to look at a way to get that back so businesses weren't hurt, it wasn't an undue burden on residents in Glendale. That's one reason we did the initiative.
Ted Simons: Why is the tax hike necessary?
Yvonne Knaack: After about four years of tightening our belts by eliminating 25% of the employees, 22% of our budget, employee furloughs of about 5.5 million, two years, 5%, consolidating departments, we even had a program called innovate which staff came up with ideas how to save money. It came down to this year we had eight budget meetings and we saw there's no way we were going to be able to make the June 30 deadline for a balanced budget required by state law. That is when we made the decision to do the temporary sales tax.
Ted Simons: 35 cents more on a $50 purchase. First tax hike, city sales tax like in Glendale in 20-some-odd years. Is it not time to maybe look at this and consider what the city council has done?
Pat Quinn: First if what you said was true that would be all right. It's not the first. There's been three city sales tax increases since 1993. All were initiated by citizens. They were to help public safety, fire and police, or to do transportation things. The tax has went up. It's gone to 2.2% over time. Secondly, it sounds really nice, 35 cents on $50. Well, the problem is what is that over the five years of this tax, the average family of four people is going to spend about $2300 on this tax increase. That's significant to me.
Ted Simons: Sounds significant. Do you agree?
Yvonne Knaack: It is significant but I think the citizens of Glendale who appreciate the quality of life in Glendale will gladly pay that. I think most of the citizens I talked to believe. That we're also just one ever the last of 30 cities who has raised taxes. We were fortunate to have a very large rainy day funds which was sound financial planning on our part. When it came down to the recession lasting so long and being so hard, it came to the point where our rainy day fund was depleted and we were put in a position to raise the temporary sales tax or let a lot of employees go, close a couple libraries, pools. It's down to the bare necessities now.
Ted Simons: For those who say the city doesn't necessarily have a revenue problem, it still has a spending problem. You say.
Yvonne Knaack: Well, I say in the past were made when the money was there. Now we are stuck with decisions that we made which were good decisions at the time but because of the recession has caused the problem that we're in such as Camelback Ranch. I know Mr. Quinn will probable bring that up. At that time it was part of a much larger development. There was to be a five-star hotel, a golf course, offices, residential. Then the recession hit and the developer went bankrupt.
Ted Simons: The idea that city parks would close, libraries would see lesser services, police, firefighters fewer, getting laid off, services over all would be affected. Again, for this kind of a tax hike is it worth it?
Pat Quinn: First I don't follow your premise. Let me give you an example. Talk about the new Jameson arena management deal. The city of Glendale and a majority of the council have said publicly have said they would vote for giving Jameson $320 million over 20 years to run the arena. An alternative put out by the city manager but only cost 120 million over 20 years, a savings of $200 million over 20 years. That's $10 million a year. That would not necessarily they wouldn't have to necessarily lower or get rid of police, fire, they can have all the festivals for that 10. The city council has decisions to make in the past we think they have not always made the best decisions. We want the citizens back involved so if there's a tax increase the citizens vote on it.
Ted Simons: Sounds maybe police and fire, parks, libraries are not threatened.
Yvonne Knaack: Well, they are. Regardless of whether the coyotes are there or not we have to have this tax increase. It's a temporary and it's to get us through the next few years so we can make more cuts and we can't just jump off a cliff because it definitely will affect the citizens very negatively. I just think that we as a council made a decision, and as an emergency, that's why we're elected by the citizens, to make those type of decisions. I know Mr. Quinn's group is trying to take away that decision making process from the city council.
Ted Simons: Respond, please.
Pat Quinn: First of all, it's interesting, all these meetings they had and things, they really never started looking at the budget in earnest, looking for alternatives until after initiatives made T. once our initiative made it the city said, police and fire are going away, we're going to close libraries. We said all along if you think you have a $20 million problem we just found 10 of it if you don't do the coyotes deal. Today I heard they will pick up about $7 million over five years, that's another seven, so you're really close. Maybe some of them should be closed and you go look at them like the festivals. Some probably make money, some don't make money.
Ted Simons: It sounds first of all as far as the coyotes are concerned you see that as a major factor.
Pat Quinn: The arena agreement is a major factor.
Ted Simons: So once again, we're back to the coyotes. Is it time for the city to say we simply can't afford this. If police appeared fire are going to be threatened, if this tax increase doesn't go through, we have to look at this thing again?
Yvonne Knaack: We built the arena for the coyotes. They bring in $500 -- they bring in 500,000 people a year to the Westgate area. The offices around there, Cabela's, Herald that was part of the bonds election that voters approved in 1999. It's unfortunate that the coyotes went bankrupt. No one ever expected that to happen. So we got stuck with this problem. It is still our problem. We still own the arena. We have the debt to pay on it. Maintenance. I still believe if we can get the owner in there that that would be the best solution. We had Mr. Birenbaum, an attorney that did the study onto the gift clause, who said over the long run we would come out okay on that. We would make money. He didn't even include the revenue from the Westgate area.
Ted Simons: Can you afford to have that place out there, not have a hockey team?
Pat Quinn: Well, if it costs you $15 million a year to have it going with a hockey team, it only costs you $6 million to not have it going, that seems like a $9 million a year savings to me.
Ted Simons: So you're saying if it sits empty it will save the city money?
Pat Quinn: First of all if you got a more traditional management agreement, that manager would come in and try to fill it with different things, a tractor pull, ICE skating venue, whatever it is. The right now the owner of the coyotes is the manager of the arena. What incentive do they have to bring any shows there besides the coyotes?
Yvonne Knaack: Actually with the agreement we're crafting with Mr. Jameson he has obligations to bring other events there.
Pat Quinn: Let me respond to that. That here's the deal. There going to give him on average 15 million a year. The deal they have with Jameson, if the coyotes don't play a game he has to pay the city $60,000 for every game they don't play. That's $2.4 million. If he doesn't have any of the 30 events he's required to have he has to give the city $30,000 for every event he doesn't have up to 30. He gives the city basically $3.3 million and they give him 15.
Ted Simons: I don't want to get too bogged down in the details. Obviously this is a major factor, however, another major factor of this proposition is all future sales tax hikes would have to be approved by voters. Is that wise?
Pat Quinn: Yes.
Ted Simons: Why?
Pat Quinn: It's wise where Glendale is now. One of the things while they talk about a temporary sales tax, there's no way this taxis temporary. Traditionally what they have done with their bonds and with this arena deal if it goes through in the first five years you have low payments. After five years they start increasing. Some of these bonds and things have been around since 2002, 2003. They have had the years when the payments are down. If you look at what's going to happen after five years starting in the years six and the seven you'll see payments go up for bonds, for the coyotes.
Ted Simons: The idea that voters get a say on all future tax hikes, why not?
Yvonne Knaack: Well, I would hope that they would. However, to take that authority away from the city council who are elected to represent those citizens I don't think is right. That's why we are there. That's why we have the ability to raise that tax because had we not, we would not have been able to balance our budget this year. Just plain and simple. Do I think it should go to the voters? I would hope so. But in an emergency situation a council needs that ability to make that decision.
Ted Simons: What about a council elected by the people doing what it's supposed to be doing?
Pat Quinn: People gave them the ability to set sales tax. The people can take it away from them. It shows to me that the citizens are fairly savvy. If in three times since 1993 they have went in and said we need more help with fire, police or transportation we're willing to raise sales tax to do that. The city council can put it on the agenda, you can vote fairly quickly.
Ted Simons: But as far as being savvy they have also voted this particular city council into office. The deals with The Coyotes and Camelback Ranch have come from this council.
Pat Quinn: The savvy voters weren't seeing the ramifications of this until now.
Ted Simons: The idea of lower sales taxes in Glendale. The idea that it would attract shoppers from other cities, a higher sales tax would make Glendale shoppers go somewhere else. Valid?
Yvonne Knaack: To a point because since the sales tax went in in August we haven't seen a lot of push-back, especially from small businesses, people that I ask, Arrowhead Malis packed. Cabela's is packed. All the places I have been. Our sales tax revenues are up.
Ted Simons: We have to stop it there. Good discussion. Good to have you.
Yvonne Knaack:City Councilperson, Glendale; Pat Quinn:Former President, Qwest Arizona;
