KINGSPORT - Alderman Ken Marsh is suggesting the $3 million loaned from the general fund to cover expenses and debt at the MeadowView Conference Resort and Convention Center include $800,000 in interest.
The regional sales tax came about in 1992 when Kingsport took on $25.7 million in debt to pay for the construction of MeadowView and the Cattails Golf Course. To pay off this debt, city residents voted 2 to 1 by referendum to increase the sales tax by a quarter cent and earmark the money toward the debt and operating subsidy for the center.
The quarter-cent tax generates around $3.1 million annually, with about 60 percent of the money coming from people living outside the city of Kingsport.
The final payment on MeadowView will be made in September 2007. Beginning in fiscal year 2009 (July 1, 2008), approximately $2.1 million will be available to the city. The golf course will not be fully paid off until 2017.
However, city officials recently learned the city's general fund needs to be paid back approximately $3 million from the regional sales tax - money loaned from the general fund over the years to cover shortfalls in the tax. From 1998 to 2003, Kingsport actually advanced $4.2 million to MeadowView, but in 2003 in order to balance the budget Kingsport took $1.3 million from the MeadowView fund.
City Manager John Campbell has said the $3 million could be paid back all at once, thus taking nearly all of the regional sales tax for fiscal year 2009, or in increments over a number of years.
During a recent Board of Mayor and Aldermen meeting, Marsh suggested interest be accrued on that $3 million. Finance Director Jim Demming said this week the interest would amount to roughly $800,000.
During the work session, city leaders asked Marsh to come back with a date in which the money should be paid back. However, the next night at a regular BMA meeting when Marsh came back with a seven-year deadline, city leaders voted 5-2 to table Marsh's motion to impose interest on the $3 million.
Alderman Ben Mallicote said at the time he thought Marsh's proposal was probably a good one, but added he did not think the BMA had given the proposal due consideration.
Marsh's proposal is likely to come before the BMA in the near future.
This week, Marsh said he would like to see the $3.8 million paid off as soon as possible, thus earmarking a majority of the regional sales tax at least until 2010.
"The money from the tax is not there. The bills on MeadowView carry us another 18 months before there is any free cash. Then if we pay the interest back, that takes all of the free cash from another year or two or three," Marsh said. "So this theory of taking the (regional sales tax) and spending it on something nobody ever envisioned is dead on arrival as far as I'm concerned."
This "something" Marsh mentions could be the proposed higher education center in downtown Kingsport city leaders are working to accomplish. Mayor Dennis Phillips, one of the main proponents for the center, has said he would like the $10 million facility to be paid for from a portion of the regional sales tax.
Phillips said he thinks charging interest on the $3 million is the appropriate thing to do but believes it is premature to make a commitment on the regional sales tax when the BMA is 30 days away from making a decision on the higher education center.