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The board that governs the Qwest Center Omaha hates Mayor Jim Suttle's proposed entertainment tax so much that its leaders offered the city a $5.6 million cash advance to drop the idea.
Suttle rejected the proposal.
Had the mayor accepted the offer, the amount would have covered about half of the projected $11 million city budget shortfall that Suttle is trying to make up, at least in part, with his proposed 2 percent tax on restaurant meals, drinks, concert tickets and other entertainment. The 2 percent entertainment tax would affect anyone who saw a show or went out to dinner in Omaha, whether they lived in the city or not.
In a statement released to The World-Herald on Monday, the Metropolitan Entertainment and Convention Authority, which runs the city-owned Qwest Center, essentially offered a city with cash flow problems an immediate infusion.
The offer: an advance of the convention center and arena's remaining naming rights payments through 2017, using MECA's reserve funds, if the mayor agreed to forgo his proposed entertainment tax. Each year, Qwest Communications Inc. sends MECA a payment for naming the complex after the telecommunications company, according to the statement.
City Finance Director Carol Ebdon said the city plans to use those naming rights funds to pay off debt from Qwest Center-related riverfront improvements. If the city were to use that money in its general fund, it would still have to make up the difference in the debt fund for the riverfront — most likely through increased property taxes, she said.
Also, Ebdon said, the advance that MECA offered would be only a one-time boost to the general fund and would be no help in addressing future city financial problems if revenues continue failing to keep pace with costs. And the money would cover just half of what is needed to shore up next year's budget, so the city would still have to cut spending or generate cash flow.
Suttle met last week with MECA Board Chairwoman Gail Werner-Robertson and MECA President Roger Dixon, according to the MECA statement. The mayor turned down their offer for those reasons, Ebdon said.
“It doesn't help us,” she added.
Suttle has said that the entertainment tax would bring in an estimated $10.3 million at a time when the major revenue sources for city services — sales taxes and property taxes — are projected to remain essentially flat or decline.
But restaurant owners, already subject to sales taxes, have opposed an entertainment tax in Omaha, saying diners would choose to eat outside the city to avoid paying the tax.
And Dixon has said he and the MECA board are lobbying the City Council to reject it.
“This is a tax of diminishing returns, which has the potential to turn promoters and guests away from Omaha,” Dixon said in the statement.
“We are concerned that this tax will upset the careful balance of delivering top entertainment and events while continuing to operate Qwest Center Omaha profitably for Omaha taxpayers.”
In addition to the entertainment tax, Suttle has proposed a 2.4-cent city property tax increase in his 2010 budget plan. If approved, it would be Omaha's first property tax increase since 2002. That revenue would be used to pay off debt, primarily from the Qwest Center.
Had the city used the advance from MECA for its general fund, Ebdon said, it would have left a $5.6 million gap in the city's debt fund. The city might then have had to raise its proposed property tax increase higher than 2.4 cents to make the riverfront debt payment.
In essence, she said, the city would be taking money meant to pay off its debt.
Contact the writer:
444-3100, maggie.obrien@owh.com
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