Daily Tax Report: State

Anti-Tax Group Challenges Ticket Tax Supporting NHL Arena (1)

Jan. 17, 2019, 8:50 PMUpdated: Jan. 17, 2019, 9:42 PM

A coalition of anti-tax advocates is dropping the gloves for a fight to end Columbus, Ohio’s ticket tax for renovations at the NHL’s Columbus Blue Jackets arena.

The group is kicking off a signature drive on Jan. 18 to put a city charter amendment before voters in November that would ban the 5 percent tax or any event tax going forward. On Jan. 17, they also sent a demand letterto Columbus threatening a lawsuit and claiming the tax allegedly violates provisions of the Ohio and U.S. constitutions.

“We had to close public schools three days last year because there’s no air conditioning, but Nationwide Arena wants to dip into our pockets for air conditioning in a stadium where the Blue Jackets pay no rent,” Mike Gonidakis, one of the leaders of Advocates for Responsible Taxation (ART) told Bloomberg Tax Jan. 17.

ART claims the tax compels businesses and taxpayers to financially support objectionable speech in violation of the First Amendment of the U.S. Constitution and a corresponding section of Ohio’s constitution. The tax also arbitrarily discriminates against some taxpayers and uses taxpayer money for operations of “an objectionable private corporation,” the group said.

Michael Brown, chief of staff to Columbus City Council president Shannon Hardin, issued a Jan. 17 statement saying the tax was the result of a “decade of discussion and research” and follows a model used in 63 Ohio cities. He called it a “smart way to make sure people from across the nation who come to Columbus for major events like Hamilton or huge concerts at the Horseshoe” pay to support local arts.

Two Ordinances

The group seeks to hip-check two ordinances passed in December. The first, a “stability fund ordinance” that is estimated to raise $2.4 million annually for Nationwide Arena infrastructure updates and $600,000 for capital improvements in Columbus theaters and museums. This money would come from taxing events at Nationwide Arena.

The second, a “creativity fund ordinance” would raise $6 million annually for arts grants. The money is raised through a 5 percent tax on events city-wide, but exempts venues with fewer than 400 seats, events with tickets of $10 or less and nonprofits that don’t receive arts program funding.

ART says that some very large events, such as “the world’s largest single-breed horse show,” held by the American Quarter Horse Congress, would be exempt because the group is a nonprofit that doesn’t receive arts funding.

The tax goes into effect in July. The Greater Columbus Arts Council pushed the measures, arguing America’s 14th largest city lags behind other metros with higher arts funding. The $2.4 million wouldn’t be enough to fix up the publicly owned stadium but would help with “a few knees and hips, as well as a few tummy tucks and face lifts,” Franklin County Convention Facilities Authority Executive Director Don Brown said in Nov. 27 testimony before the council.

The ordinances—introduced and passed in less than a month—received wide support at City Council meetings. However, Bret Adams, an attorney and sports agent leading a coalition of businesses against the tax, said there was immediate concern from event-holders.

“There was a lot of objection from the single movie theater to the national players on how this tax was enacted,” he told Bloomberg Tax Jan. 17. “We had one meeting with city leaders, were promised other meetings, and it didn’t happen.”

Past Success

Over several decades, ART has used voter referendums to defeat about 10 taxes in central Ohio. It even defeated a property tax increase sought by the locally loved Columbus Zoo and Aquarium.

The group has until July 3 to collect 11,030 signatures needed to put its city charter amendment on the November ballot. The group thinks that shouldn’t be difficult because public support for stadiums has been huge news in Columbus.

In late December, the Columbus City Council approved $50 million in taxpayer support for infrastructure improvements as part of a deal that stopped the Columbus Crew from leaving town.

“Taxpayers are tired of it,” Gonidakis said. “The bubble has popped, and the Crew was the needle.”

The Greater Columbus Arts Council declined to comment.

(Updates with city comment in fifth paragraph.)

To contact the reporter on this story: Alex Ebert in Columbus, Ohio at aebert@bloomberglaw.com

To contact the editors responsible for this story: Jeff Harrington at jharrington@bloombergtax.com; Megan Pannone at mpannone@bloombergtax.com

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