The Glendale City Council voted, 4-3, Tuesday to approve a tentative budget for the coming fiscal year.

The city looked to layoffs, tax increases and service cuts to close a projected $35 million spending gap.

A public hearing and final adoption of the $579 million spending plan is scheduled for June 12. The budget is 2 percent lower than the $638 million spending plan in effect through June 30.

Mayor Elaine Scruggs, Councilman Phil Lieberman and Councilwoman Norma Alvarez voted against the budget.

The plan is based on the assumption that council will approve a proposed 0.7 percent increase in the city sales tax and a 61-cent secondary property-tax hike, which would be phased in over two years. Those proposed tax hikes will be voted on during the budget's adoption.

The budget includes a $17 million placeholder for management of the city-owned Jobing.com Arena, home of the Phoenix Coyotes.

Greg Jamison, a former San Jose Sharks executive, is poised to buy the hockey franchise from the National Hockey League and keep the team in Glendale. Jamison and Glendale must agree to an arena lease and operating agreement and Jamison must work out the sale with the NHL.

City administration has said Jamison agreed to the $17 million from the city for next year.

After that, the city would expect to pay Jamison $20 million annually until 2017, when the bill would drop to $15 million, city budget proposals show.

The city would pay an average of $14.5 million over the 20-year lease to operate the arena for the team and other events, such as concerts.

No details on arena fee

Scruggs said council received a draft arena-management agreement Friday night. The council met behind closed doors Tuesday to discuss the agreement.

The city has not provided the public a breakdown of what arena expenses the fee would cover.

The Goldwater Institute weighed in on the council's actions Wednesday.

Darcy Olsen, president of the conservative watchdog group, said she was encouraged by reports the Coyotes deal would not include "a massive up-front payment to help the buyer purchase the team." She added that the Goldwater Institute would examine whether the arena-management fee was more than the value of services Jamison would provide the city to run the arena.

"The Goldwater Institute cannot authoritatively comment on the legality of the deal until we and Glendale taxpayers can see the details," Olsen said.

Councilman Manny Martinez said the Coyotes lease agreement could come before the council for a vote on June 12. However, it could come sooner if the council opts to hold a special meeting.

Resident Ken Jones, at Tuesday's council meeting, said the budget with its hockey spending is "one more step in ruining our city's finances."

"Hockey has bled our city long enough," Jones said.

Arthur Thurston singled out Vice Mayor Steve Frate, Councilman Manny Martinez and Councilwomen Joyce Clark and Yvonne Knaack and said "you four will make the decision that will affect our families for 20 years."

Supporters make case

Clark said the bulk of the city's debt resulted from building infrastructure such as fire stations and the Foothills Recreation and Aquatics Center and that a "very small portion was attributable to the Coyotes."

The city is having a hard time paying its debt because the revenues aren't coming in as expected during a weak economy, she said.

Clark said the city's $35 million deficit without the arena management fee would only drop by $3 million to $7 million.

She said supporting the budget was a "very, very hard thing for me personally to do."

"I am the only sitting council member running for re-election yet I am supporting a sales-tax increase and a property-tax increase," she said. "That is not what you would call the smartest thing to do but I am doing it because I believe it is the right thing to do at the right time, right now."

Martinez said he has never experienced a budget like this in the past 15 years. But he said he stood by his support for it. He said the city reduced its property-tax rates during good economic times and is now paying for those decisions.

Knaack said she is against tax hikes but saw no other solution this year. She noted that each year the city can evaluate the need for both taxes.

Frate said city employees come up to him and tell him to "stay the course" and keep the Coyotes in Glendale.

Opponents' concerns

Alvarez listed the annual debt payment for the arena since 2004, about $10 million a year. And she mentioned the $50 million the city has pledged the past two years for the NHL to manage the team and arena.

"I'm not against having the Coyotes here if we had the money," Alvarez said. "We can't blame it all on the economy. We did some things that were not smart."

Lieberman said he has voted for the budget for 20 straight years, but this time he couldn't because it includes tax increases and funding for the Coyotes, which he said should pay its own way.

He said the millions in the proposed 20-year Jamison contract would fund a city courthouse and library, both delayed a number of times because of the lack of money.

Scruggs said she couldn't support a budget that includes a $17 million arena-management fee. She said under the 2001 arena agreement, it was the team owners and not Glendale that shouldered the facility's operating costs.

"Now, things are entirely different," Scruggs said. "Now, we have been paying the NHL a subsidy to operate that team."

She said the NHL payouts have stretched the city's budget to where the city is borrowing from other accounts to make good on the IOUs.

Scruggs said she truly believed that with the proper management the arena can be booked with far more events than now, including the 41 nights of game play.

"I do believe that we can be better served ... if the arena was used in some other ways," she said.

She said it was not council's obligation to draw traffic into Westgate City Center, but the property's owners. She pointed to nearby shopping centers that she said are thriving without hockey.

She said there is no room for error in the budget. The city has been draining its rainy-day funds, which was $72.5 million in 2006. It is now down to $2 million. The city's reserve earlier this spring had been reported at $4 million, but Scruggs said half went to pay a claim in a lawsuit the city lost at the city-owned airport.

"Where does the city of Glendale go to find funds to pay the next unplanned expense?" she asked.