‘The citizens spoke very clearly by the thousands to apply it to MeadowView. If it seems wise to apply it to (the higher education center) then the citizens need to vote on that.' - Ken Marsh
KINGSPORT - Alderman Ken Marsh believes if the regional sales tax were to go toward anything other than the MeadowView Conference Resort and Convention Center, then the issue should be left up to the citizens of Kingsport to decide.
Marsh made these comments during last week's Board of Mayor and Aldermen meeting regarding the proposed higher education center for downtown Kingsport.
Mayor Dennis Phillips said in January a portion of the tax would be the best source of funds to construct the $12 million facility. But as Marsh pointed out during last week's meeting, the tax would provide little, if any, unallocated money for at least the next two years.
"For me, the use of the (regional sales tax) for the higher education center is dead on arrival," Marsh said.
On Friday, Phillips did not back down from his earlier statement about the regional sales tax.
"I think an appropriate use of the tax, a portion, should go to the higher education center," Phillips said. "I think we could support a $10 million bond issue and use that much of the tax to pay it back without jeopardizing the future needs of the tax."
Phillips said he has no intention of voting on a property tax increase to pay for the higher education center, and given the choice between that and using a portion of the regional sales tax, he believes the public will choose the latter.
"We need to look very hard and listen to the public on that and see if they feel so too," Phillips said. "I haven't seen the public up in arms against it. If we educate the public, I think they would be open-minded about it."
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 and the expected operating subsidy, city residents voted 2 to 1 by referendum to increase the sales tax by a quarter cent. This past year's subsidy to MeadowView from the city was $432,000. The highest amount has been around $830,000.
The quarter-cent tax generates roughly $3.2 million annually with approximately 60 percent of the funds coming from people living outside the city of Kingsport.
The final payment on MeadowView will be made in September. However, the BMA voted last week to pay back the general fund $3.8 million from the regional sales tax - $804,000 a year to 2014. This figure represents money - along with interest - loaned from the general fund to cover shortfalls in the tax over the years.
Two bonds were issued to pay for Cattails, which retire in 2011 and 2017. Kingsport still has to pay $600,000 a year in debt service on Cattails to 2011 and then $150,000 to 2017.
After MeadowView is paid off in September, the regional sales tax still has to cover annual expenses - $400,000 for fixtures, furniture and equipment; a $450,000 subsidy; the $804,000 refund to the general fund; and the continuing debt for Cattails.
City Manager John Campbell said over the next seven years approximately $9 million in unallocated funds will be generated from the regional sales tax.
"The first few years, it's not a lot because you're obligated, with all of that payback and everything," he said.
And another unknown with MeadowView is the roof - the warranty expires this year - and could cost $700,000 to $1 million to repair, money that would have to come from the regional sales tax.
"Any talk about a referendum some say couldn't be considered until 2017. I think you couldn't begin to look at it until 2014," Campbell said. "From property taxpayers' point of view, I wouldn't be excited about looking at it at all. It would be the equivalent of a 25 cent increase on the property tax rate or an 11 percent increase overall."
Last week, Marsh said it would be unethical to use regional sales tax funds for anything other than MeadowView, that the public should be allowed to decide whether the money is reallocated.
However, according to the referendum, the regional sales tax does not sunset when MeadowView and Cattails are paid off, and the BMA could reallocate those funds as they deem fit, according to Pat Hardy with the Municipal Technical Advisory Service.
"Unless there's something specific in the original referendum that established the sales tax ... the tax stays in place and you can use those dollars for anything," Hardy said.
During last week's BMA meeting, Phillips even produced fliers about the referendum, which were meant to educate the public about the measure. In the fliers, it states the tax could be removed or reallocated after the bonds are paid off.
Hardy said the city could not have a referendum to reallocate the funds, only to add the tax or take it off.
However, Marsh said the BMA could put an advisory referendum before the public, to decide whether the regional sales tax could be used for something other than MeadowView.
"It's a legally standing referendum and basically says this is the way the citizens feel about an issue," Marsh said. "If we're going to use that money in some other direction, the citizens spoke very clearly by the thousands to apply it to MeadowView. If it seems wise to apply it to (the higher education center) then the citizens need to vote on that.
"Otherwise, it's basically unethical."
Sullivan County Election Commissioner Gena Frye said state law allows the BMA to request a private act from the state legislature to submit an advisory, non-binding referendum to the voters of Kingsport.
However, since the referendum is non-binding, the BMA would not have to abide by it.
Frye said if the referendum were held during an existing election, such as this May's city election, the cost would be minimal. If the referendum were held by itself, the cost would be around $25,000 and be paid for by the city of Kingsport.