Marcos Breton: Arena deal's collapse does nothing to help city finances

Published: Sunday, Apr. 29, 2012 - 12:00 am | Page 1B
Last Modified: Thursday, Apr. 18, 2013 - 7:45 pm

With a downtown arena deal now dead, the focus turns to a horrendous city budget where Sacramento may have to lay off scores of cops and firefighters.

How many of those jobs will now be saved because Sacramento is no longer spending its time in arena negotiations with the owners of the Kings?

"None," said John Shirey, Sacramento's city manager.

How many extra millions of dollars that might have gone to the arena will now pour into city coffers?

"None," Shirey said.

How many closed city pools and libraries will now be able to stay open because this arena business is over?

"That's a myth," Shirey said.

Yes, that's a myth.

The reasons Sacramento is in a sixth consecutive year of deficits – and is facing looming cuts to public safety – have nothing to do with the arena.

It's because city revenues are at 2006 levels due to property and sales taxes being depressed. Those taxes largely pay for city services, and until these shortfalls are addressed, little is going to change in Sacramento.

City officials had hoped to sell or lease parking garages to fund the bulk of the arena's construction costs because parking vendors might have paid big money for city lots suddenly utilized on nights and weekends for arena events.

Those possibilities are now dead, but the problems that plague Sacramento remain:

The city has too many public sector employees who put their entitlements over everything else, and not enough private sector employers opening businesses and creating jobs.

Many of us jumped on the arena bandwagon because it offered an opportunity to develop the abandoned downtown railyard and finally turn it into something besides dirt and rusted buildings.

The hope was that an arena run by AEG, the global arena operator and concert promoter, would create energy in the downtown core. In the short term, construction jobs might have gone to men and women who have been unemployed and underemployed for years.

In the long term, the hope was that other businesses would congregate near the arena and bring jobs with them while elevating property values.

Would it have been a panacea? No. It would have been one move the city could have made to entice business owners to set up shop in Sacramento.

Shirey is contending with a $15.7 million budget deficit for the fiscal year that begins July 1. He is asking all city employee groups to do something very simple to save jobs: Contribute their fair share to their own pensions. He's not asking them to take a pay cut.

In previous years, the city agreed to pay both the employer and the employee shares of police officer and firefighter pensions. As The Bee's Ryan Lillis reported Friday, that arrangement would cost the city $37 million in the next fiscal year.

This is pre-tax money. The cops and firefighters would barely miss it in their paychecks and still get it in the long run. Besides, cops are getting a 3.5 percent pay raise on July 1 and firefighters are getting a 5 percent raise on Jan. 1, Shirey said.

This what we're talking about: a reasonable request with minimal inconvenience to save 34 police jobs and 62 firefighter jobs.

Anyone who says it's horrible that the city considered putting up money for the arena while public safety jobs were on the line is ignorant of what is being asked of public safety employees to save jobs.

So what happens now that the arena deal is dead?

The railyard remains a piece of dirt. The Kings remain in a building that the Kings owners have let go to pot. The Kings owners still could file for relocation, especially if attendance dips because the owners have turned off the fan base by killing the arena deal.

If they do relocate, they must pay off a loan to the city of about $65 million – money that goes to bondholders and not the city. Then it's very possible the Maloof brothers become absentee owners of the former Arco Arena as it falls further into disrepair.

The Maloofs would be gone, an undeniable benefit. But the real issues that plague Sacramento would remain.

© Copyright The Sacramento Bee. All rights reserved.

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