Voters give KC surprise sales tax windfall
The Kansas City Star
Thanks to Kansas City voters, City Hall will get at least a $3.5 million surprise windfall in extra sales tax revenue.
In other words, city government is going to have even more money to spend than it originally thought it would in the current fiscal year, which ends April 30, 2013.
The potential for a sales tax windfall received no attention during the election, and was not openly discussed by supporters such as Mayor Sly James. Instead, they often extolled the virtues of approving a new half-cent sales tax as well as killing $10.5 million a year in property taxes on land.
(Those property taxes, by the way, will continue to be collected this year and don’t get zeroed out on residential and business tax bills until late 2013.)
The surprise sales tax windfall for City Hall occurs for the following reason, which I confirmed in recent days with City Manager Troy Schulte and Finance Director Randy Landes:
When voters strongly endorsed the sales tax increase on Aug. 7, they mandated that it start being collected Jan. 1, 2013.
Ultimately, the city will reap about $8 million in sales tax money in the remaining months of the current fiscal year.
However, the current city budget had always planned on spending $3.5 million to keep the Parks and Recreation Department’s community centers open from May 1 of this year through April 30 of 2013.
Problem was, Schulte didn’t have a funding source for this purpose in the 2012-13 budget, because the $12.50 a vehicle license fee used to finance the centers had been collected for the last time in late 2011.
Now, however, Schulte will be able to use some of the extra sales tax revenues from early 2013 to keep them open. This is consistent with what voters were told would happen with future sales tax receipts.
In addition, the city by law has to divert a certain percentage of all its sales tax revenues to support private projects backed by tax increment financing.
That strips another $1 million from the extra sales tax revenues in early 2013.
Take the original $8 million in extra revenue and that leaves $3.5 million in new sales taxes for City Hall to spend on other priorities during the rest of the current fiscal year.
In an interview Tuesday, Schulte said the leading contenders were using $3 million for better road maintenance and $500,000 to help expand the hours of community centers.
At this point, those are legitimate spending proposals.
Keep in mind that KC voters endorsed a new and better-financed road repair fund when they approved the higher sales tax in early August. That was a priority James especially stressed on the campaign trail.
Schulte said the extra money “might get us up to another 30 miles of streets repaved yet this (fiscal) year.”
Plus, the parks department made it clear that it would have to close or severely limit the hours of community centers if the sales tax failed. Since the tax passed, though, it can be presumed by parks supporters that keeping the centers open for longer hours would play well with Kansas Citians.
Ultimately, James and the council ought to approve a plan for spending the sales tax windfall of at least $3.5 million.
They also ought to thank voters for giving the city the money in the first place.