I Told You So: Westworld

Being a critical observer of city government can be a thankless job…well, it might be a job if I got paid for it, but it is mostly thankless.

However, once in a while I see a headline [Audit: Westworld faces $3 million deficit in 2014] that provides a little gratification and makes me look smarter than I probably deserve. I’ll take this little opportunity to pat myself on the back just a bit.

Contrary to the principles of our much ballyhooed “civil dialog” in Scottsdale, I’m also going to say to Mayor Jim Lane and the Scottsdale City Council, “I told you so.” In fact, I’m going to optimistically commit to make that a standing series on ScottsdaleTrails, anticipating that I’m going to be able to say it a few more times in the immediate future.

In this case, I publicly cautioned the City Council a year ago against bloating the improvements at Westworld to include expensive deviations from the main mission, in order to accommodate the Barrett-Jackson car auction. They did so anyway with no serious effort to analyze the financial projections, and even in spite of concerns expressed by ‘finance professors’ Jim Lane and Ron McCullagh (who both also voted in favor). Maybe they were trying to provide themselves cover for this very day.

Westworld was designed primarily to host equestrian events. It has become a vital part of Scottsdale’s tourism industry and of our western culture and heritage.With regard to automotive uses…

I support the concept of multiple uses of public facilities. For those who don’t know, I’m also a car guy. I’ve tinkered with cars since before I had a drivers license, and built (with help of a sympathetic older friend) my first car (a dune buggy) before I’d graduated from high school. Since my tour of active duty with the US Air Force, I’ve made my living from automotive design. So, I’m not unaware or unsupportive of Craig Jackson’s business and his premier event in Scottsdale.

On the other hand, I’ve been disappointed to observe over the years how Mr. Jackson has thrown his weight around to get favorable dispensation from the City of Scottsdale in various matters. In spite of his contributions to our cache, Scottsdale is more responsible for Jackson’s success than the other way around. Ironically, in the very same issue of the Republic today where the Westworld deficit was reported, Craig Jackson acknowledges his debt (figuratively speaking) to the city and her residents with a half-page thank-you column.

I’d like to also remind the readers that despite millions of dollars’ worth of sales every year at Jackson’s Scottsdale auction, most of those are not subject to sales tax due to a legislative carve-out [Sales tax loophole benefits car auctions] created primarily to benefit Mr. Jackson.

I believe, though it wasn’t cited in the Republic article cited above, that this loophole is found in a statutory list of activities exempt from sales tax or “transaction privilege tax” in Arizona Revised Statute 42-5061 under section A paragraph 45.

42-5061. Retail classification; definitions

A. The retail classification is comprised of the business of selling tangible personal property at retail. The tax base for the retail classification is the gross proceeds of sales or gross income derived from the business. The tax imposed on the retail classification does not apply [emphasis added] to the gross proceeds of sales or gross income from:

45. Sales of motor vehicles at auction to nonresidents of this state for use outside this state if the vehicles are shipped or delivered out of this state, regardless of where title to the motor vehicles passes or its free on board point.

However, I find it interesting that there appears to be a contradictory provision in another state statute:

28-4410.01. Public consignment auction dealers; exemptions; notices; requirements; payment of taxes; wholesale motor vehicle dealer prohibition

H. This section does not exempt a public consignment auction dealer from any transaction privilege tax imposed pursuant to title 42, chapter 5.

In the Scottsdale Republic article linked above, self-described “conservative Republican” state representative John Kavanagh, R-Fountain Hills, is quoted:

“If we charge sales tax to out-of-state people who buy them at specialty-car auctions, then the car auctions would not come to Arizona and we would have zero revenue, not to mention the loss of the associated taxes and purchases to hotels and restaurants.”

This is classic (pardon the pun) rhetoric to justify subsidies to favored private businesses and other special interest. Just like with the rationalizations for the TPC subsidy, it is completely ridiculous. Craig Jackson has already has events in other locations, and guess what? He still has an auction in Scottsdale because it is the biggest event on the circuit (just like with the TPC). Rep. Kavanagh, you should be ashamed of yourself.

Back to the Westworld deficit: Scottsdale mayor Jim Lane and the city council rushed to approve a rushed and not-well-thought-out project, and the result is a looming hole in our budget that will have to be filled by either higher taxes, or funds robbed from elsewhere in the budget.

Mayor Lane, City Council: “I told you so.”

Scottsdale Republic: Razzies to you for not reporting that the Council was warned well in advance.

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