http://www.sacbee.com/content/news/story/14261232p-15074828c.html
Arena's strategy for tax assailed
But the project's backers ardently defend its legality.
By Terri Hardy -- Bee Staff Writer
Published 12:01 am PDT Saturday, May 27, 2006
A strategy to finance a new Sacramento arena with a quarter-cent sales tax approved by a majority of voters would likely violate state law, according to the author of the state proposition that outlined how such levies are imposed.
Any proposed sales tax to be used for a specific purpose, such as an arena, would need to be approved by a two-thirds vote -- not the simple majority that arena backers have stated, said Jon Coupal of the Howard Jarvis Taxpayers Association on Friday.
"How can you describe this as anything but an arena tax?" Coupal said. "If this (proposed) tax is intended to pay for an arena, it's a special tax requiring a two-thirds vote."
Coupal is an attorney and the principal drafter of Proposition 218, the "Right to Vote on Taxes Act" passed by voters statewide in 1996.
Arena backers on Friday dismissed Coupal's concerns.
Bob Ryan is the Sacramento County counsel who has been examining legal issues surrounding the arena financing plan for the civic leaders spearheading arena talks. He said he's convinced that a two-thirds vote isn't necessary.
Taxpayer group critics were "providing a legal analysis on an ordinance they haven't seen," he said.
John Dangberg, a Sacramento assistant city manager for economic development and the city's arena point person, said he is confident in Ryan's take on the law. However, the city has asked the law firm Orrick, Herrington & Sutcliffe for a third-party opinion.
Orrick was the firm that represented Santa Clara County in a test case. Once its opinion has been delivered, it will be reviewed by City Attorney Eileen Teichert, and she will provide her own opinion.
"This is why we've been somewhat circumspect about the full funding proposal," Dangberg said. "We haven't completed our due diligence."
While the arena team has yet to reveal the complete plan for paying for a new arena, it has said it's considering a quarter-cent sales tax and land swaps as part of the public financing component. The Maloof family, the owner of the Sacramento Kings, also is expected to contribute.
Beyond funding an arena, backers are expected to propose using the funding plan to pay for a host of other civic improvements around the region.
While technical, the question of whether the proposed sales tax increase is for general or specific purposes is a crucial one. Arena team members acknowledge that achieving a two-thirds vote for any tax, whether it's for schools, police protection or arenas, has proved exceedingly difficult in California.
Following the example of Santa Clara County, arena supporters said they planned to put two questions on the ballot for voters. One would be a binding question, asking whether voters would approve a general sales tax increase. The second would be a companion advisory question on whether voters would support certain projects, including an arena.
Ryan said in this way, the sales tax increase would be for general purposes and only require a majority vote. In a precedent-setting case, the state Supreme Court in 1998 upheld a Santa Clara County sales tax increase passed for no specified purpose on a simple majority vote. The same ballot included a separate measure that said extra sales tax funds should be used for transportation improvements.
Arena backers include several attorneys -- county Supervisor Roger Dickinson, City Councilman Rob Fong and former Assemblyman Darrell Steinberg. All said they don't have a legal opinion but are comfortable with Ryan's interpretation.
"We have a capable and confident county counsel," Dickinson said. "He has looked at this carefully."
Coupal said the Santa Clara County tax and Proposition 218 both appeared on the same ballot in November 1996. Because Proposition 218 didn't go into effect until the following day, it didn't apply in the Santa Clara County case. However, Coupal contended it would apply in any case after Proposition 218 took effect.
Although the legal issues surrounding the tax are cloudy, what's becoming clear is that a lawsuit is brewing.
Coupal said his organization "will take a very serious look at contesting the validity" of a proposed sales tax increase.
Joe Sullivan, the executive director of the Sacramento County Taxpayers League, in a letter to city and county officials, said the ballot strategy as proposed "would likely lead to litigation."
Sullivan had this piece of advice:
"Follow the law, tell voters the truth and put the measure on the ballot as a special tax," Sullivan wrote. "If successful, with the right mix of private money and a solid plan to make the arena self-supporting, you might have a chance of building an arena and retaining the Kings."
Dickinson said the criticism by the Taxpayers League and Coupal doesn't come as a surprise.
"They have not been supportive of any initiative which might involve any public money spent on a sports arena," Dickinson said. "It doesn't surprise me they would try to conjure an argument against the type of approach validated in the Santa Clara case."
About the writer: The Bee's Terri Hardy can be reached at (916) 321-1073 or thardy@sacbee.com.
Arena's strategy for tax assailed
But the project's backers ardently defend its legality.
By Terri Hardy -- Bee Staff Writer
Published 12:01 am PDT Saturday, May 27, 2006
A strategy to finance a new Sacramento arena with a quarter-cent sales tax approved by a majority of voters would likely violate state law, according to the author of the state proposition that outlined how such levies are imposed.
Any proposed sales tax to be used for a specific purpose, such as an arena, would need to be approved by a two-thirds vote -- not the simple majority that arena backers have stated, said Jon Coupal of the Howard Jarvis Taxpayers Association on Friday.
"How can you describe this as anything but an arena tax?" Coupal said. "If this (proposed) tax is intended to pay for an arena, it's a special tax requiring a two-thirds vote."
Coupal is an attorney and the principal drafter of Proposition 218, the "Right to Vote on Taxes Act" passed by voters statewide in 1996.
Arena backers on Friday dismissed Coupal's concerns.
Bob Ryan is the Sacramento County counsel who has been examining legal issues surrounding the arena financing plan for the civic leaders spearheading arena talks. He said he's convinced that a two-thirds vote isn't necessary.
Taxpayer group critics were "providing a legal analysis on an ordinance they haven't seen," he said.
John Dangberg, a Sacramento assistant city manager for economic development and the city's arena point person, said he is confident in Ryan's take on the law. However, the city has asked the law firm Orrick, Herrington & Sutcliffe for a third-party opinion.
Orrick was the firm that represented Santa Clara County in a test case. Once its opinion has been delivered, it will be reviewed by City Attorney Eileen Teichert, and she will provide her own opinion.
"This is why we've been somewhat circumspect about the full funding proposal," Dangberg said. "We haven't completed our due diligence."
While the arena team has yet to reveal the complete plan for paying for a new arena, it has said it's considering a quarter-cent sales tax and land swaps as part of the public financing component. The Maloof family, the owner of the Sacramento Kings, also is expected to contribute.
Beyond funding an arena, backers are expected to propose using the funding plan to pay for a host of other civic improvements around the region.
While technical, the question of whether the proposed sales tax increase is for general or specific purposes is a crucial one. Arena team members acknowledge that achieving a two-thirds vote for any tax, whether it's for schools, police protection or arenas, has proved exceedingly difficult in California.
Following the example of Santa Clara County, arena supporters said they planned to put two questions on the ballot for voters. One would be a binding question, asking whether voters would approve a general sales tax increase. The second would be a companion advisory question on whether voters would support certain projects, including an arena.
Ryan said in this way, the sales tax increase would be for general purposes and only require a majority vote. In a precedent-setting case, the state Supreme Court in 1998 upheld a Santa Clara County sales tax increase passed for no specified purpose on a simple majority vote. The same ballot included a separate measure that said extra sales tax funds should be used for transportation improvements.
Arena backers include several attorneys -- county Supervisor Roger Dickinson, City Councilman Rob Fong and former Assemblyman Darrell Steinberg. All said they don't have a legal opinion but are comfortable with Ryan's interpretation.
"We have a capable and confident county counsel," Dickinson said. "He has looked at this carefully."
Coupal said the Santa Clara County tax and Proposition 218 both appeared on the same ballot in November 1996. Because Proposition 218 didn't go into effect until the following day, it didn't apply in the Santa Clara County case. However, Coupal contended it would apply in any case after Proposition 218 took effect.
Although the legal issues surrounding the tax are cloudy, what's becoming clear is that a lawsuit is brewing.
Coupal said his organization "will take a very serious look at contesting the validity" of a proposed sales tax increase.
Joe Sullivan, the executive director of the Sacramento County Taxpayers League, in a letter to city and county officials, said the ballot strategy as proposed "would likely lead to litigation."
Sullivan had this piece of advice:
"Follow the law, tell voters the truth and put the measure on the ballot as a special tax," Sullivan wrote. "If successful, with the right mix of private money and a solid plan to make the arena self-supporting, you might have a chance of building an arena and retaining the Kings."
Dickinson said the criticism by the Taxpayers League and Coupal doesn't come as a surprise.
"They have not been supportive of any initiative which might involve any public money spent on a sports arena," Dickinson said. "It doesn't surprise me they would try to conjure an argument against the type of approach validated in the Santa Clara case."
About the writer: The Bee's Terri Hardy can be reached at (916) 321-1073 or thardy@sacbee.com.