Proposed taxes may be small, but mask bigger problems
Published 12:24 am Sunday, December 14, 2014
So the City of Natchez — or at least the mayor — wants to raise taxes on hotel and B&B stays and meals and drinks at restaurants and bars.
The goal, they say, is to fund the expansion of the Natchez Convention Center.
But the real goal is to prevent the city from making tough financial decisions.
Email newsletter signup
The city’s convention center is a great asset to the city, far better than the one it replaced, but it’s like a car whose owners have refinanced and refinanced it over and over.
Now the building is 15 years old, but still has $9 million of its original $12 million debt owed.
It would be a bit like a person spending $20,000 to buy a brand new Ford F-150 pick-up — a truck with all the bells and whistles — back in 2000. The owner drives the car for 15 years, and today still owes the bank $15,000 on the car.
Even the bankers who famously signed off on tons of subprime mortgages would probably choke on that logic-lacking math.
Yet, that’s the situation the city finds itself in with the convention center. It still owes a premium of debt on a building that’s far from brand new.
The solution, the mayor and others contend, is to expand the building and roll the $4 million expansion cost into the existing debt and extend the payments until 2035.
Using the truck comparison, it’s a bit like putting new tires and rims and maybe a camper top on the truck and asking the bank to refinance the truck again.
The city’s financial mess is its own fault.
For years, a lack of leadership has allowed the city to simply stagnate. While businesses and residents move to just outside the city limits — though they use city streets, city fire protection and the like — they avoid paying city property tax, which funds much of the amenities we all enjoy.
The lack of leadership and perhaps a bit of greed led to what were effectively two different refinancing deals of the convention center bonds through complicated bond swap arrangements.
Hopefully city leaders — past and present — learned a valuable lesson. When a financial advisor comes to you, unsolicited, in a beautifully tailored suit and alligator-skin shoes, beware. Nothing good will come as a result.
Nothing good came as a result for city residents. Aldermen at the time effectively “cashed out” some funds to help the city in the short run, but effectively delayed the pain until later.
Later arrives in 2015, as the city believes it may struggle to pay its convention center note without the two new sales tax initiatives.
The sales tax amounts are relatively small and on their surface should be easy to swallow. But it’s simply masking the bigger problem.
The city needs to annex growing areas of the county — full city-county consolidation would be better, but likely will never happen.
Further, the city needs to take hard look at how it has committed its windfall — largely lobbied by former Mayor Jake Middleton who deserves credit — in a $1 million annual lease payment from Magnolia Bluff Casino.
Many of the city’s publicly owned buildings are in horrible disrepair. Just last month the city had to authorize approximately $100,000 in emergency repairs to the City Council Chambers building, just across from City Hall. The building has been so neglected that a window had fallen in and the exterior paint and stucco is peeling.
If the $1 million casino lease payment had been earmarked for reducing debt and slowly built up an emergency fund, the city wouldn’t constantly have to make “pay-day” tax-anticipation loans each year.
But the solution isn’t more careful spending and conservative fiscal management. The solution is more careful borrowing and stretching out debt for our children to pay, right?
In this season of giving, hopefully the city leaders will realize it’s also a perfect time to simply save as well.
Kevin Cooper is publisher of The Natchez Democrat. He can be reached at 601-445-3539 or firstname.lastname@example.org.