The Arizona Supreme Court has thwarted Glendale’s attempt to block a voter initiative seeking to reverse a recent city sales tax increase. The state’s high court upheld an appeals court ruling that allows voters the opportunity to repeal the tax hike on Nov. 6.
Some members of the City Council say that rejection of the tax increase would have a severe impact as the city seeks to cover new obligations amid falling revenues.
Glendale is in the midst of controversial negotiations to facilitate the sale of the National Hockey League’s Phoenix Coyotes to a buyer who would keep the team playing in the $180 million bond-financed Jobing.com arena.
The Glendale City Council approved raising the sales tax to 2.9% from 2.2% in June to boost revenues by $20 million annually.
The increase, which took effect Aug. 1, was intended to help the city cover an arena management payment to the Coyotes’ proposed buyer. When combined with sales taxes for Maricopa County and Arizona, Glendale’s 10.2% sales tax is one of the highest in the Phoenix area.
Glendale officials initially rejected the petitions to overturn the tax hike that were submitted by a business group calling itself Save Glendale Now. City officials said that an initiative could not reverse a council tax decision.
A Maricopa County Superior Court judge ruled in favor of Glendale, but a three-judge appellate panel said that the issue should appear on the November ballot.
The state Supreme Court announced Sept. 5 that it would not review the ruling, leaving the appeals court ruling standing.
With the sale of the Coyotes unresolved and uncertainty about the sales-tax revenue, Glendale is unable to refund outstanding debt for its sports facilities.
On Jan. 20, Moody’s Investors Service downgraded Glendale’s general obligation bond rating to Aa3 from Aa2 and shifted the outlook to negative from stable. Three days later, Standard & Poor’s downgraded the city to A-plus from AA and also assigned a negative outlook.
Moody’s attributed the downgrade to the city’s “strained financial position” related to the Coyotes.