Budget Woes

Gail Kerr has a good column today on the challenges Metro faces as we put together FY11's budget. Not that any of this is news. To his credit, the Finance Director issued a similar warning to the Council this past spring which I discussed a bit at the end of this post.

Missing from Gail's analysis is the outcome of the convention center debate. If the convention center is approved, it very likely rules out a property tax increase. We can talk til we are blue in the face about how the revenues for the proposed convention center can only be used for a convention center. In addition to turning blue we will also be lying because many of the taxes (2% of HOT and redirected sales taxes which make up the majority of the earmarked revenues) can and/or are being used for something else. In addition to turning blue and lying we would also be misleading because we can and have changed state law to expand the permitted uses of of these taxes. The most recent example of this sort of change is when we created the Convention Center Authority. In the same bill we also expanded the use of the 1% Tourist Related Activities money to include financing a convention center. We tried and failed to expand the use the 2% Direct Promotion of Tourism to also include financing the convention center. That effort was stopped when someone discovered we would be killing the CVB's funding. None of these facts will matter because regardless of the limitations - real or perceived - of state law, the public will believe that the property tax increase was directly related to the construction of the convention center.

The possibilities for a sales tax increase are equally remote for the same reason. Increasing sales taxes will require a public vote and that day at the ballot box could easily turn into a referendum on the convention center.

The convention center demonstrates an "all-our'eggs-in-one-basket" approach that could turn our other obligations to our employees, our city services, our education system into after-thoughts that become victims of political backlash.