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And of course the reason is the members of the Glendale city council were not doing their job. They were more interested in hob nobbing with professional sports teams, instead of doing the things city governments usually do like collect the garbage and provide water and sewer service.
3 scenarios for Glendale budget: All include cuts Glendale finances tied to voters, arena, debt by Lisa Halverstadt - Sept. 19, 2012 09:40 AM The Republic | azcentral.com Three variables could dramatically impact Glendale's bottom line: the possible repeal of the city's recent sales-tax hike, how much the city will pay a potential Phoenix Coyotes buyer to manage the arena, and whether the city will be able to refinance its debt on a spring-training ballpark. City leaders are in negotiations with potential Coyotes buyer Greg Jamison. Voters will weigh in on the sales-tax initiative in November. And an attempt to refinance debt likely is further out. But city leaders this month began preparing for the worst. The loss of the sales-tax hike would mean slashing $11 million this fiscal year and $25 million the following year, about 14 percent of the general fund. Interim City Manager Horatio Skeete has asked for lists of potential cuts from every city operation, from public safety to parks and recreation. He plans to return to the Glendale City Council with options, possibly next week. The concerns follow a difficult budget process this past spring when a council majority closed a $35 million shortfall by laying off 49 employees, cutting departments and increasing the city's sales-tax rate. A business group, concerned by the 0.7 percentage-point hike and the lack of communication from the city, soon gathered support for a ballot initiative to reverse the tax increase. Voters will decide on the measure Nov. 6. Ahead of voters' decision, Skeete is preparing budget scenarios. The possibilities Skeete anticipates cuts whether the tax increase stays or goes. That's because of the debt on Camelback Ranch-Glendale. The city borrowed nearly $200 million for the ballpark in 2008 with plans to pay it off over nearly 30 years. The city has been paying the annual debt with borrowed funds that have now run out. The city will have a $6.6 million payment due in January, a bill city leaders had not anticipated because they expected to have refinanced the ballpark debt this fall. They are holding off until the Coyotes deal is completed and voters weigh in on the sales-tax initiative. A nearly $16 million bill for the ballpark will hit the general fund next year, unless the city can refinance the debt. Under the best-case scenario, with the city keeping the tax hike, negotiating a lower arena management fee and refinancing its ballpark debt, Skeete recommends cuts of about $6 million annually that would begin to rebuild the city's reserve fund. A healthy reserve helps the city's credit rating. Without the sales-tax hike, the city would lose the annual $25 million it was counting on for five years. The tax hike was implemented with a 2017 sunset. To take it a step further, if the city loses the Coyotes, expected revenue would shrink by about $2.5 million. However, the city could reduce its arena management fee. The current Coyotes deal calls for the city to pay an arena management fee to Jamison of $10 million to $20 million each year. Without the team, Skeete penciled in an arena-management fee of about $6 million, a figure he estimated based on past arena audits from the former Coyotes owner and initial research into other cities' arena deals. That fee is far lower than the amount discussed by former City Manager Ed Beasley, who had said it would cost at least $12 million to operate the arena. City officials had said the fee to Jamison was not a subsidy to the financially beleaguered franchise. The city has never put management of the arena out for bid, so it's unclear if the city could actually find a company to book and operate the arena for Skeete's $6 million estimate. But an analysis based on that estimate shows Glendale could save about $29.5 million in the next five years if the Coyotes leave. Some city officials say the long-term benefits of keeping the team outweigh the earlier costs. Councilwoman Joyce Clark and other supporters say the team attracts fans to Westgate City Center at least 41 nights each year and helps the city bring in additional sales-tax hauls. Others, including Mayor Elaine Scruggs, question whether Glendale can afford the Coyotes investment during a time of budget cuts. But losing the Coyotes isn't a short-term solution as the city would still face cuts if they left and struggle to rebuild its reserve fund. Diane Goke, the city's chief financial officer, said losing the team or the tax hike could complicate Glendale's ability to refinance its ballpark debt, which would strain the budget. Councilman Manny Martinez said he hopes residents realize the city is not trying to scare residents to discourage them from repealing the sales-tax hike. "Things are bad," he said. "This is the reality of what could happen if the tax goes away." City staffers were equally concerned. Any cuts will require layoffs and the elimination of city departments. The Police and Fire departments, which dodged the more serious cuts that hit other city departments, have been asked to propose 20 percent in cuts like other city operations. Julie Reed, co-chair of the Glendale Police Officers Coalition, said the potential cuts come at a time when crime has risen and police already are dealing with lessened staffing. Glendale resident Rod Williams, the chairman of the group backing the sales-tax initiative, attended last week's meeting. He acknowledged the city may struggle without the sales-tax hike but said city officials must react to a tightened budget like any resident or business owner. "They have to face the fact that they can't afford all the luxuries that they've had the past few years," Williams said. For example, the city might consider selling the Glendale Civic Center or its landfill, he said. Skeete told The Republic he has not ruled out such options. SCENARIOS Scenario No. 1 The situation: Glendale's sales-tax hike stays in place, the city reduces the arena-management fee it pays to a likely Phoenix Coyotes buyer and restructures its debt payments on Camelback Ranch-Glendale, the city's spring-training ballpark. Impact: The city projects it would need to cut $3 million in expenses this year and $6 million annually for the next four years. Scenario No. 2 The situation: Voters approve a ballot initiative to reverse a city sales-tax hike, the city reduces the arena-management fee it pays to a likely Phoenix Coyotes buyer and restructures its debt on Camelback Ranch-Glendale. Impact: The city would face dramatic cuts as it projects it would lose $11 million this year and $25 million annually for the next four years. Scenario No. 3 The situation: Voters approve a ballot initiative that could reverse a city sales-tax hike, the city fails to restructure its debt on the ballpark and the Coyotes leave. Interim City Manager Horatio Skeete penciled in a $6 million arena-management fee without the team. Impact: The city projects would face dramatic cuts as it projects it would lose $11 million this year and $24 million annually for the next four years. |