SASKATOON — The Canadian Taxpayers Federation is calling on Saskatoon city council to come clean about the potential impacts to taxpayers of using alternative methods to fund the proposed downtown arena and entertainment district.
“If teams playing in the arena have a dip in ticket sales, taxpayers could be on the hook for a big bill,” said Gage Haubrich, CTF Prairie director.
“City council shouldn’t be gambling taxpayers’ money on ticket sales.”
On Sept. 13, city council will be presented a consultant’s report outlining new taxes and other measures to pay for a new downtown arena.
In 2018, city council resolved that “the overall principles be to seek approaches that minimize the reliance on property taxes to pay for this arena.”
The proposed new measures include a hotel tax, a ticket tax and tax increment financing.
A hotel tax would add a mandatory fee to hotel and other short-term accommodations in the city, making all hotel rooms more expensive, according to the CTF.
A ticket tax is a surcharge that would be added to the cost of every ticket purchased. However, taxpayers could be on the hook if revenue falls short of expectations, the organization warns.
“Facility fees rely on a sustained attendance rate, and to the extent that the attendance does not meet expectations, the City of Saskatoon may be required to cover shortfalls,” says the consultant’s report.
“City council can’t bet the city’s financial future on the Blades making the playoffs every year,” Haubrich said.
Tax increment financing is a subsidy given to an area for development. New tax revenue from that area is supposed to back the subsidy, but taxpayers would have to pick up the bill if revenues are lower than projected. A similar scheme was used to finance Winnipeg’s IG Field and resulted in multi-million-dollar bills for taxpayers, the CTF reports.
“To the extent that the TIF revenues are insufficient to cover the debt service, a city is generally required to cover the shortfall through other funding sources,” says the report.
Saskatoon is currently projecting a deficit of $22 million in 2024 and $19 million in 2025. This would result in an eight per cent property tax increase in 2024 and a six per cent increase in 2025.
The new arena and event district is expected to cost more than $500 million.
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