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Dave Clark column: Why can’t city leaders connect dots between expenditures, revenue?

DAVE CLARK • Jun 27, 2013 at 7:34 AM

Recently, I went through one of those personality-strength tests — the ones that tell you more about yourself than you really want to know. My strengths are strategic planning and visioning (not surprising since I used to teach strategy at West Point). However, I am almost devoid of relationship building and communication skills.

The commentary that accompanied the results was enlightening. While I am adroit at perceiving complex interactions and understanding their relationships over time, I am not very good at explaining to others how the dots are connected. Perhaps this explains much of my ineffectiveness in getting across to city leaders how the projects and policies they are putting into place will affect the community in the future.

It is the old theorem-based logic from geometry. If A, then B. If B, then C. Therefore, if A, then C. The leadership either cannot make the jump from A to C, or they have been led to believe that C is not relevant. In either case, Kingsport’s citizens have a right to be concerned.

The headlines in last week’s paper seem only to make this clear (although it may not be clear to those who make the decisions). The relevant stories were that the BMA, after having said it would not bond more new debt than rolled off this year, proceeded to approve a plan that doubled the amount that was retired. At the same time, the school system is studying taking over Colonial Heights Middle School and possibly the Innovation Academy. Furthermore, a report indicated that a primary source of city revenue, retail sales tax, was down.

So what are the dots that ought to be connected? First, more debt means greater debt service payments in the future, which requires more revenue. Second, it seems imminently reasonable to presume that if Kingsport were to incorporate either of the two schools it is considering, a sizeable sum of money would have to be spent to bring them up to the standards of other city facilities and to equalize teacher pay. This would require both additional capital and an increase in operating funds, entailing once again more revenue. Finally, lower sales tax revenue means “less revenue!”

It is only common sense to question whether decisions to undertake projects that would expand the need for funds at the same time a source of revenue is decreasing would be reason to pause and consider whether the decision-making is sound.

For this entire process to make sense, one or both of two conditions would have to apply. Either the drop in sales tax receipts is only temporary and the receipts will increase significantly in the next budget year (because the increase would have to not only cover the increase in expenditures, it would have to make up for the loss of revenue due to lower receipts than expected); or the other sources of funds, namely property tax income, would need to increase significantly enough to cover the shortfall.

Whether either of those conditions will apply is unknown. However, one might hope and expect that the city manager would undertake such analysis and present it to the BMA to assure city leaders that his plan is both feasible and wise. To date, there has been no report of such an action, nor is there any public indication that the BMA has requested such an analysis. After such scrutiny, one might also expect the BMA to send notice to the Kingsport City Schools administration that it should not expect additional funding for its projects.

Of course there is always the option of reconsidering some of the projects we currently have under way. For example, might it not be prudent to ask the School Board whether it would like to build an extravagant new stadium or husband those funds to cover the probable expenditures that its current adventures might entail? Let school officials make the decision about where they would rather spend their money: cushy seats or education of our children. Such reasonable, but hard questions asked now might put a quash on unwise expenditures. It is too late to raise the issue after the funds have been spent.

We must demand that our leaders connect the dots. The dots they need to connect include future dots, not just balancing today’s dots.

There are logical and reasonable relationships between things that happen, particularly when many of those are completely within the control of the decision-makers.

When I connect the dots, I see the real prospect that Kingsport’s expenditures in the not too distant future will exceed its revenues. Without significant growth, an unlikely occurrence, the logical consequence of today’s actions is a tax and/or fee increase for the citizens. The strategist in me simply can’t fathom why this is so hard for our leaders to grasp.

Dave Clark is a Kingsport businessman and a former alderman.

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