Too often when localities lure sports franchises to their city, they lean on consumers to foot the bill. Instead of telling voters "this is what we want to build, and this is how much it will cost," they often hide the total costs by putting in place discriminatory excise taxes. This practice was front and center this past weekend in Glendale, AZ -- the home of Super Bowl XLIX.
The University of Phoenix Stadium in Glendale was supposed to be financed through rental car taxes. Rooted in the belief that the people who rent cars are exclusively business travelers and tourists, local officials thought this would be a convenient way to pass on the massive costs to consumers who don't vote in their jurisdictions. Discriminatory rental car taxes provide seemingly consequence-free funding -- as well as a convenient way to get around that whole "taxation without representation" thing.
The reality is that arenas for millionaire owners are being built with money from consumers who can least afford it. More than half of all rental car customers are local renters, many of moderate means. They rent cars because they cannot afford to own one, or when they have no other public transportation options. Others may own an older car, and rent when they need a more reliable source of transportation. Some simply need a larger vehicle, or need to get around while waiting for repairs to be completed on their primary vehicle. Whatever the reason, the fact remains that it's often consumers who can least afford it that are paying a disproportionate share of these taxes.
I am the director of a small nonprofit that rents a lot of cars each year. We, too, pay the mysterious charges and fees that help billionaires build their pet projects. It's hard on our bottom line as well. Relying on consumers to pay for arenas and stadiums is bad policy, and it's time for Congress to take preventative action.
Back to Glendale: rental car taxes were initially used to build the University of Phoenix Stadium. But then the Arizona Supreme Court stepped in and ruled that, for constitutional reasons, rental car taxes must go to road construction. The Court's ruling forced the city to refund the taxes in question, shifting the burden of paying for this boondoggle from rental car drivers to all citizens of Glendale.
All of this has left Glendale in a precarious position; according to a recent New York Times report, the city's debt obligations are almost 5 percent of its tax base, "nearly four times the national median and twice the average rate for cities in Arizona." And more "than 40 percent of the city's debt is dedicated to paying off sports complexes." Ultimately, it's the citizens of Glendale who will pay the price, not the owners who wanted a shiny new arena, or the politicians who were wooed by what they thought would be an endless revenue-generator.
Unfortunately, Glendale's citizens are not alone. Since 1990 more than 100 discriminatory rental car taxes have been enacted in 43 states and here in Washington, DC. In total, rental car customers have spent more than $7.5 billion in taxes to fund the pet projects of local elected officials, sports team owners, and others.
Glendale should serve as a cautionary tale for other cities thinking of imposing discriminatory taxes to build stadiums -- if things don't work out, it is the city and its citizens who are left with massive debt burdens.
This is an issue of major concern for the National Consumers League (NCL). We have worked for more than 100 years to fight exactly this kind of unfair policy. While we understand the role of taxation for providing critical services, we do not support using taxpayer money to pay for the private interests of billionaire sports team owners. That is why we've joined the Curb Auto Rental Taxes (CART) Coalition, which is working to end car rental excise taxes in the United States.
It's time for Congress to step in to prevent cities like Glendale from backing themselves up on their own goal line. We fully support the bi-partisan End Discriminatory State Taxes for Automobile Renters Act (EDSTAR), which would solve this problem once and for all. We strongly urge all Members of Congress to put their constituents first and join us in supporting this important bill.