What is the Appropriate Business Model for Government Operations?

Last night the Haines Borough Assembly Government Affairs & Services Committee (chaired by Steve Vick) filled the lobby of the Chilkat Center. Mr. Vick asked "what can government can do to increase the utilization of the building?" Response to that question coalesced around the idea of improved management and marketing. One of the implied goals is to increase revenue associated with the building.

Currently the Chilkat Center is managed by Lynn Canal Broadcasting (KHNS) in lieu of rent. Kay Clemens, KHNS Manager, indicated that the management scheme is not working well these days due to limited KHNS staff, expertise, coupled with a decision to prioritize broadcasting related activity.

If we look at the Chilkat Center as a business, we have to consider revenues (rental income) compared to expenses. Later on in the evening, Chief Financial Officer Jila Stuart emailed actual revenues/expense data from FY09,10,11 and the budgeted revenue/expense for FY12. Expenses have exceeded revenues by $50-60,000 during those periods. The lion's share of the expenses for the Chilkat Center goes to utilities ($40 - 50,000 annually). Annual rentals to a long list of groups (the building seems to be used frequently) range from $24,000 to $34,000. So, in order to run a "break even" operation, the challenge would be to implement strategies that would result in increased revenues and decreased operating expenditures, setting aside, for the moment, the $1.2 million estimate for immediate repair to the roof and its supporting structures provided recently by Jensen, Yorba, Lott.

And here's where the policy decisions come in: What community needs should local government support with infrastructure? What economic model should the Borough adopt for the operation and maintenance of that infrastructure? When, if ever, is a "break even" model appropriate for government operations? When an activity or a facility does not independently generate sufficient revenue to cover expenses the revenue stream is filled by taxes. What services and activities are we, as a community, willing to tax ourselves to support? That's the question.