Midwest Voices

Yael T. Abouhalkah

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First, here’s something positive about critics of Kansas City’s earnings tax: Some of them are really smart people.

Now for something more critical: They don’t understand the Kansas City budget.

Here’s proof.

In a new press release, the people at kctaxreform.com - the site financed by a shadowy, anonymous group - “congratulates Kansas City for already cutting 10% from its earnings tax revenue…. Well, not exactly. As it turns out, figures show that earnings tax revenue for 2010-11 is actually $181 million…. The earnings tax revenue in 2008-2009 was $202 million. In 2009-2010 actual revenue was $198 million, the next year it fell to $181 million. In other words, the city has already absorbed a 10 percent cut in earnings tax revenue and met its budget without cutting police and firefighters or raising property taxes.”

Alas, the e-tax opponents are wrong about what happened, having failed KC budget 101.

True, Schedule VIII of the general fund shows, by year, the following sums:

2008-2009, Actual: $202,249,290.

2009-2010, Actual: $198,492,315.

2010-2011, Estimated: $181,380,672.

2011-2012, Budget: $186,622,769.

Wonder why that big drop occurred?

It’s right there on the next line: It’s called “tax increment redirection.” It’s the amount of money from the earnings tax that’s being diverted to pay for projects financed by public incentives. And in the 2011-12 budget, the amount is $16,327,000.

Now, add that amount to the $186.6 million in the earnings tax and - voila - you get $203 million, which is how much the earnings tax will bring in.

What about those earlier years — in the 2008-09 and 2009-10 budgets, where the earnings tax was around $200 million but there was no “tax increment redirection”?

The e-tax was still diverted to the projects; the budget just doesn’t show that, because the city’s budget wasn’t set up that way at the time.

So, in the real world, earnings tax revenue has not dropped by 10 percent the last few years. The amount of e-tax available for basic city services (after diversions for incentives projects) hasn’t gone down at all.

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