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Tuesday, March 11, 2008

Finding new sources of revenue

By Mark Forsythe
The Kansas City Post


In the current round of budgeting there appears to be a serious shortfall. Most estimates I've seen come in around $78 million. It's obvious that when you're short on revenue you have to spend less. The city council faces some tough decisions on where cuts are to be made.

What strikes me the most is in all this talk about the budget, everyone is proposing cuts, but nobody is looking at the problem from the other side. What about increasing revenue? Of course it's not just a simple matter of "finding" a few extra dollars from new sources, but when tackling finance issues it's important to take a complete approach. There are many opportunities to squeeze a few more dollars into the city coffers. You just have to be creative.

Many times I have been told that city government partnering with private interests is a non-starter. Issues of partiality, conflict of interest and many other "why we can't do it" excuses arise. Yet our own Public Works Department has launched a progressive recycling project that offers advertising space on the side of receptacles located throughout downtown. The walls of the KCI terminals are lined with advertisements. I'm sure creative minds can think of other opportunities to offset program costs by offering sponsorships. What about the Clean Sweep program? Every year the amount of dumpsters available to neighborhoods becomes fewer and fewer due to budget constraints. Why not sell advertising space on the side of the dumpsters? Playground equipment is another possibility. In a quick unscientific poll of neighbors with children, there was no opposition to an ad or two on the playground. In fact, the general reaction was one of goodwill towards any corporation who would buck up for a nice swing set or slide.

Obviously selling a few ads is not going to balance the budget. We must look to other sources. Each year millions of dollars in federal grants are distributed across the country. Municipalities obtain these grants through a process of applications, establishment of need and ability to meet various guidelines. Most municipalities acknowledge the value of these programs by retaining a development department. Kansas City is one of the few major cities that does not have even one full-time grant writer, let alone an entire department. Obtaining grants is a complicated bureacracy and asking city employees to secure grants in addition to their regular responsibilities puts Kansas City at a competitive disadvantage. It may seem counter-intuitive to add employees in a time of budget shortfall, but a grant writer position pays for itself many times over.

Municipal budgets are complicated. Prioritizing spending takes no small amount of political courage. But finding new sources of revenue will be time and effort well spent.

Comments on "Finding new sources of revenue"

 

Blogger jferg said ... (12:09 PM) : 

I highly oppose the idea of putting advertising on everything in sight; especially playground equipment. I already get tired of there being billboards everywhere I look; having it printed on trash cans, sidewalks, street signs, everything city-owned would just be unbearable.

 

Anonymous the wife said ... (3:15 PM) : 

Your ideas are those of a creative entrepreneur – not a tired bureaucrat.
The only creative thoughts I’ve heard out of the elected leadership purports excuses why they can’t be punctual for appointments mixed with justifications for exotic overseas networking excursions.
I do see a lot of tired bureaucrat talk – how hard the job of Mayor and Mayor spouse can be, the long hours, he demands on council persons, the stress of retooling the budget. Creative problem solving is not borne of a pot of collective self-pity.

Unlike jferg, I don't mind the extra advertising if it increases revenue and doesn't come from my pocket.

 

Anonymous inafunkaboutthefunk said ... (6:58 PM) : 

How about a We Buy Ugly Homes sign on top of Casa Funkhouser? He can split the revenue with the Cuty if it's okay with Gloria.

 

Anonymous Anonymous said ... (8:48 AM) : 

KC is between a rock and a hard place. Being the largest city in the US as far as physical size (500 square miles) is not cheap. KC already has sales tax rates nearing 8%, property taxes and is one of only a few cities in the US that has an earnings tax on top of it all. This recession is going to leave KC in a bad way and citizens are going to be shocked at the result.

 

Anonymous But we got great press said ... (9:26 AM) : 

While other communities were bracing for the downturn in the economy KC stood out and got all that great press and awards for all the nice things we were building. Our Mayor thought that was all good stuff. Sometimes when you stand out it is a bad thing.

 

Anonymous thin margin said ... (1:21 PM) : 

Take a hard look at some of the services we get from the city. Start with the just passed landlord licensing act. We will fall into a money trap with this one. It should be self supporting from the get go. Maybe privatize it? Any college student can get trained to do the actual work. Same with a lot of the inspections we have. The food inspections are a joke. They will never be caught up!.

 

Anonymous Joe Medley said ... (9:59 PM) : 

I've had similar ideas about the Metro for a while. The add space on the inside of the bus is underused. Why can't they print coupons for local businesses on the backs of the $1.25 passes?

 

Anonymous Joe Medley said ... (10:00 PM) : 

By the way, Kansas City is 316 square miles, not 500. I think that's three or four miles smaller than NYC.

 

Blogger Eric said ... (11:31 PM) : 

This isn't rocket science. There are two components to the budget, revenue and expenses. It is stupid to always focus expenses and never have the balls to talk about revenue.

Can't we at least pay lip service to a discussion on revenue? Kansas City is a Democratic city. Good Democrats vote for taxes, it's intrinsic to who we are. So let us vote!

 

Anonymous Anonymous said ... (1:08 PM) : 

I don't particularly see the problem with having an unbalanced budget as long our credit rating remains stable, we're paying down outstanding interest, and (ideally) growing our economy (metro GDP). Who really cares if we're spending more than we take in as long we pay down interest...look at the federal gov. - they certainly don't, and until this year the economy has grown accordingly.

Additionally, I think closing the zoo is a great idea and such drastic measures may be the only way to insure true regional financing for regional amenities, which is absolutely necessary in KC. Either the burbs can help fund it, or we don't have a zoo. Brilliant!

 

Anonymous Anonymous said ... (9:44 AM) : 

Why no tonyskansascity.com? It's just the feeling, that given half a choice, a life without Tony Botello's voice seems more appealing.

 

Anonymous Anonymous said ... (2:11 PM) : 

Billboards Yes Billboards need to pay excise tax, property tax, tax the erection of each billboard just like we pay for a building permit. A $500,000 billboard should pay a sizeable construction fee not just the present erection fee. My $560,000 house costs me $5000.00 in taxes. Billboards yes Billboards need to pay.
The county and the city have minimum lists that are on 4x5 inch cards and a lot of the billboards are forgotten.

 

Anonymous Kim Tucker said ... (3:31 PM) : 

I have been asking the same question for a while:

First let's blame landlords for the problems and yes there are a few bad apples out there, but for the most part the vacant falling down structures are just abandon by the families, the owners, and the heirs - no one owns them.

So the city in it's wisdom enacts this licensing law for landlords with no way to fund it. Let's use the already working on 500+ cases - codes inspectors rather than figuring out how to pay for the inspectors.

And oh by the way - did you know you only have to register your rental properties. Those vacant houses that you own that you don't currently rent, & don't have a for rent sign on them, you don't have to register them.

So my first thought turns to these vacant properties. No one owns them, so the city is in charge. Let's move quickly on ustilizing current laws for the city to quickly gain owner ship on all 2000 to 4000 vacant properties the city has and have a big sale. So if they were able to sell just 2000 properties for $2000 each that would be $4,000,000 (yes 6 zeros)

The second, all these new owners, well they would need to bring all the back taxes current and at a little over $200 a year in taxes for the past 3 years, for 2000 houses is a little over $1,200,000 in back taxes and this is a hugely conservative low number. And would be paying taxes next year and for years to come for even more revenue that they are not getting now.

Now once these new owners have these properties, they will probably need to do some renovation on them. If we figure just $10,000 in materials for the repairs for 2000 houses, and the sales tax alone at 5% would be $1,000,000.

Now most of the buyers would not be doing the repairs themselves, they would be hiring someone. So if just 1/2 of those houses hired 1 contractor and took 4 weeks to do the repairs. That would be 160,000 man hours in labor costs paid to local workers who would then have more in payroll to spend in area stores for more uncounted sales tax to the city.

Then when these 1000's of vacant properites were renovated and rented up or sold to nice home owners, the values of the homes in the areas would increase, increasing the real estate taxes coming in to the city even more.

With all the renovation in the housing stock, big companies like walmart and target would take a look at the area as a viable place to build a store and with a new Wal Mart plopped down in the middle of the KCMO urban core I have no idea what kind of sales and sales tax revenue it would bring in plus 100's of jobs for the area.

Now let's look at some other revenue the city would gain by not having to pay to maintain 2000 vacant properties: The city charges about $800 to board up the houses, so 2000 board ups: $1,600,000 they would not have to do in the next few years.

The city also mows all these lots around the vacant properties at about $50 to $100 a pop at least 3 times a year for about $300,000.

Lets add up some nubmers:
$4,000,000 in sales prices
$1,200,000 in back taxes
$1,000,000 in sales tax
$1,600,000 in board up savings
$ 300,000 in mow fees per year

That puts about $8,100,000 in to the city budget in the next year. That should be just enough to pay for our new city sewer system or possibly to entice some private companies to build in the urban core.

The problem is with the lack of any help in the urban core, the flight of people, the loss of jobs, and the overall blight of the area. If the city would address this area, quickly, and from a multitude of directions, they would be able to turn around the area and have people returning to the urban core, and not be having all the budget problems in the next few years.

 

Blogger Mark said ... (11:06 AM) : 

Kim,

These are some interesting thoughts. I would like to take some of your ideas and run with them in an editorial. Would you mind?

 

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