Perhaps it is time to start the search for new ideas and new leadership

I guess I don’t understand government because it sure looks like we are headed in the wrong direction.

In business, when times get challenging, you learn to become more efficient. Recently, an industry executive stated that they were “pulling all levers to mitigate the impact of these challenges…On the cost management front, we remain well on track with our cost reduction efforts…” This sounds like an imminently reasonable and prudent approach.

For our City, the response to lackluster growth is a proud announcement that the Model City will add 11 new positions. Had the entire garbage fee increase been approved, the number would have been almost double that. In the words of the City Manager, “we felt like this was an opportunity to bring those employees on…”

Of course, the reason this is possible is the fact that government is unconstrained by market forces. Cash flow from operations simply does not matter when you can raise taxes and fees….and this is just what our fair city has done over the past few years: tax increase above the State Certified Rate after reappraisal, initiation of Storm Water Fee, imposition of the Power Franchise Fee (knowing it would be passed through to the citizens), and lately the creation of a Garbage Fee. This does not include the inching up of the service fees for sewer and water (in which the storm water fee is obliquely billed).

The story of our growth, or more precisely lack thereof, is spelled out in the economic numbers. The Great Recession hit our region hard. This is something individuals and small business know up close and personal, but somehow eludes our leaders.

For instance, the national economy has grown by 10% since its pre-recession high while the Kingsport-Bristol Metro area growth was only 1.2%. The total number of businesses in Sullivan County is down 8%. The population change between 2010 and 2015 is up just one half of one percent in the Kingsport area, effectively stagnant.

More disturbing is the fact that the community has lost 1,800 non-farm jobs and employment is down 6,404. This has caused the number of people receiving food stamps to rise by over 5% between 2008 and 2014 and household receiving social security benefits rose 5.3% to almost 44%.

On the bright side, median income is up by 7.6%. With fewer people employed, those who are working are benefiting. Hotels and restaurants also grew in number and employment. However, on net this likely means that workers lost ground as higher paying jobs were replaced by those with lower wages. In addition, the average monthly wage was up $23. Sadly that sum was erased by hikes in government taxes and fees, especially for lower income families.
It is important to note, that we have not been sitting idly by while all of this happened. Our economic development efforts like NETWORKS have been working diligently. To be fair, we have had had some success in replacing lost jobs and businesses. In addition, the statistics quoted above do not account for the, in some cases, substantial improvements in the economy we have seen over the last year. For example, home prices and number of home sales continue to improve.

The above assessment paints a less than rosy picture, one our political leadership simply has not come to grips with. Kingsport continues to believe, much like our leaders in Washington, that government is the driver of the economy and that it can spend us into prosperity. Nothing could be farther from the truth.

Many of our woes emanate from self-inflicted injuries. Perhaps, the extra public staffing might be necessary to accommodate the territory and population we extracted from Sullivan County. If what our leaders said at the time is correct, that these annexations would be financially beneficial to the City, why did we have to impose a franchise fee to pay for that staffing?

We have been getting their tax dollars for several years, but failed to reserve any of the funds we reaped from annexation. What happened to the tax money? In short, they spent it on other stuff.
The recently annexed citizens ought to be rightfully upset by the hand they have been dealt, the final insult of which was the imposition of the garbage fee, something they were told was a benefit of paying City taxes.

Furthermore, we don’t really have a property tax issue. The problem is that we gave it away. We have expanded what was a very limited tax incentive program designed to address urban blight in specified redevelopment districts to a windfall gain for development all over our community. We have given concessions for retail development that was to be offset by growing sales tax revenue that has not substantively appeared.

In our vain attempts to keep up with our neighbors, we have subsidized high-end housing and apartments. These projects create few permanent jobs and generate limited immediate tax value. The saddest outcome of this folly may be the damage done to existing developments that have been duly paying taxes all along. It is likely, we may see some doors shuttered or the conversion into low income housing that could adversely affect adjoining neighborhoods.

The lack of revenue growth for the City is a prime motivator for government to do “something else.” One subsidy leads to another as we ineffectually search for the magic bullet that simply does not exist. The fundamental problem is that we have turned our strategy on its head. The goal of government has become to generate tax and fee revenue. To put it bluntly, “We have lost our way.”

So why is this important? We are wasting money on “nice to have” items. We are putting a burden on our citizens without a commensurate return. Most damning is the fact that we are misallocating the resources we do have in ways that do not address the first-order condition-creating jobs.

It is time for our local government to cut back, not expand. We should reverse the growth of bureaucracy. We should start rolling back some taxes, regulations, and fees to spur business expansion. All of this can be done, if we will make the bold, hard choices and decide who we can realistically become, not some imagined watered-down version of someone else.

Sadly, with some exceptions, I don’t see things changing with the current leadership. I don’t live inside the Kingsport City limits, but my family’s well-being is intimately tied to its policy. Perhaps, it is time to start the search for new ideas and new leaders.