On Friday morning, the Chris Stigall radio show in Kansas City hosts a segment with Kansas City’s Mayor Mark Funkhouser. I give the mayor his propers for his willingness to do this.
Unlike some media outlets trying to keep their guests happy and coming back, Stigall doesn’t always toss the mayor softballs. Funkhouser takes the hard questions and keeps coming back.
This morning Stigall said he agreed with a city council vote to not annex and add about 300 acres to the city. Funkhouser didn’t agree with the vote. He said those 300 acres would give the city $18 million more in revenue and “we need to grow revenue.”
Chris threw a hard ball. He said the city needs to do a better job spending the money it has now. I agree. And Funkhouser agreed, but he was still fixated on the $18 million. He didn’t seem to consider that the revenue came with additional costs – like providing city services to the additional 300 acres.
Further, it concerns me when I hear the head of any government body say, “we need to grow revenue.” As a shareholder of many businesses, that’s what I want to hear from my managers.
But, the city is not a business. City government’s job is to provide basic services – roads, police, fire protection – to its citizens. It’s goal should be to provide the best quality services at the minimum cost.
In the business world, we classify departments in the business as a cost center or profit center. Profit centers are departments that bring in revenue from the customer – a retail store, for example. A profit center’s goal is to maximize revenue and profit for the business.
A cost center is a department that provides some service to the business but doesn’t directly deal with the customer or bring in revenue. Examples of cost centers are accounting or legal departments. A cost center’s goal is to provide the business with the best quality service at the minimum price.
For society, government is a cost center. It’s job is to provide basic services at minimal prices.
Unfortunately, many governments squander their current sources of revenue and then go search for more to squander, leading to silly statements like, “we need to grow revenue.”