Guess who is going to pay the bill?

The simple truth is that from a pure economic point of view, governments spend and redistribute revenue and do not produce it. It is the citizens of government who produce the revenues that support the very governments that spend and redistribute what its citizens have earned. It is no different in the city of Branson.

A recent newspaper headline in this very paper, “City may spend $4 million in reserve funds” should act as a wakeup call, albeit a little late, to the residents and businesses of Branson. Why is it a “little late?”
The article quoted City Administrator Dean Kruithof as saying, “Most expenditures are from previous agreements and revenues are flat.” The article reported that the city’s sales tax revenues are flat and that the Tourism Tax funds are down 4.6 percent.

In most cities, in this economic environment, flat revenues might be all right. In Branson however, the combination of flat revenues and expenditures from prior agreements do not bode well for Branson taxpayers and Branson’s immediate financial situation.

The thing that must be remembered is that, in terms of running and operating the city of Branson and furnishing services to its citizens and businesses, gross tax receipts don’t mean much. It is the net amount of the sales tax revenue collected available to operate the city that is important.

Oh, things look flat from a gross collection point of view, but when “expenditures from prior agreements,” particularly the Tax Incremental Financing (TIF) agreements used to finance “Branson Landing” and “Branson Hills” are factored in, the “flat” financial picture “wrinkles” pretty quick.

Let’s say that $1.00 in gross city sales taxes was collected from both Branson Hills and Branson Landing for a total of $2.00. Because of expenditures from previous agreements, in this case the TIF Agreements, the net the city actually gets to use for the operation of the city is $.50. Now some might say, “Come on Seagull, that’s ridiculous?” No, it is reality.

The city of Branson gets to keep only 50 percent of the sales tax revenues from Branson Hills and Zero percent of the sale tax revenues from Branson Landing for the next 15 to 20 years. The difference goes to pay off the investors who purchased the TIF Bonds used to pay the developers for the projects they built. The problem is exasperated if retail sales shift from non TIF areas into TIF areas.

“But Seagull doesn’t all those great jobs we were told were going to be generated from the millions of dollars in government subsidized TIF financing make up for it?” Why don’t you be the judge?
Take the actual TIF plan for the Branson Hills project that the administration in place prior to the 2007 elections approved. Find the actual number of jobs projected in that plan and divide it by the projected payroll in the plan. Is the average amount per job closer to the federal poverty level for a family of four or what most people would consider a “great job?”

And that’s just one of the previous agreements. Wouldn’t it be helpful to Branson’s citizens and businesses if the city of Branson could publish a simple list of the previous agreements that Administrator Kruithof is referring to, how much each is, when they started and when they expire?

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