Citizens Oak Ridge

Guest Column - The Oak Ridge

Impact of strategic planning on city budget causing tax problems in Oak Ridge

4/10/2007

By: Jerry Kuhaida | Guest Columnist | The Oak Ridger

Councilwoman Lou Dunlap recently expressed her concern about budget policy guidelines from the existing strategic plan and suggested a huge future property tax increase in the future. This is an issue of major importance for the citizens of Oak Ridge. The Strategic Plan was a questionable product when adopted by City Council five years ago. Consequently, its use in the annual budgeting by the Budget and Financial Committee has put the city in a precarious financial situation.

Over the years, I was involved in a number of Martin Marietta/Lockheed Martin/Department of Energy strategic planning exercises. None of the plans were appropriate for a city, however, one was used as a model. As a member of City Council when the Plan was developed, I wasn’t impressed during the development, especially when numbers for goals or objectives were pulled out of the air. They made the city’s plan unrealistic. Since that time, I gained considerable experience in strategic planning.

In developing the strategic plan for an aluminum project in the Russian nuclear city of Zheleznogorsk, I stumbled across a Japanese company’s strategic planning approach for their aluminum subsidiary while searching the Internet. The company reviewed their project's status every six months, then made appropriate adjustments to their strategic plan to meet their overall goals and objectives.


Near ancient Babylon, I was teaching Iraqi local government officials about strategic planning. My Internet research showed that there are numerous approaches depending on the type and purpose of the specific organization. I used one for a research and administration organization as a model. It was similar with the operation requirements of a city. Consequently, I learned that strategic plans had to be flexible in developing goals and objectives for different types of organizations.

For a number of years, the city of Oak Ridge followed the Score Plan and Foundations of Excellence to set budgetary constraints. The majority of the current Council members are not aware of these guidelines. One item they made me aware was the thing called inflation. It occurs every year, unfortunately, and we are conditioned to the United States government’s rate of 3 percent a year. However, different products and services have different rates. For example, construction materials can be well over 10 percent a year, depending on weather, disasters and availability of raw material. Such materials are used by the city's electric and public works department, and any capital projects that are under way.

Following the Score Plan/Foundations of Excellence guidelines, Council typically raised property tax a few cents each year — our neighbors raised them 40 to 50 cents every four years after their elections. Unfortunately, the Council’s Budget and Financial Committee has been comprised of the same three members for the past five years (standing committees are illegal but ours are “elected” annually to avoid that). During that time they have followed a faulty Strategic Plan and its goal of a Zero Budget.

Unless revenues rise accordingly — and they haven’t in Oak Ridge — each year a Zero Percent budget puts the city’s finances (and service capabilities) deeper and deeper in the hole. Jobs for our citizens are a must; however, our effort at industrial development for the past six to eight years, especially by the Community Reuse Organization of East Tennessee (CROET) at Heritage Center and Horizon Center, have failed in providing the expected jobs and associated tax revenues.

During this time, we have once more become a government town, as a businessman once said, "slopping at the trough of the government.” Our employment opportunities are almost totally dependent on the U.S. government — the Department of Energy. And, DOE is a tax burden rather than a benefit to the city government.

At some time the city’s revenues have to be increased. Under our current financial situation, it will be a property tax. And, unfortunately, it will be along the lines of what Council member Lou Dunlap has warned us of — a huge tax increase.

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