Archive for Thursday, August 3, 2000

Sales tax accounting questioned

August 3, 2000

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Finance officials in at least two Kansas cities including Lawrence are questioning the state's accounting of sales taxes.

Officials in Lawrence and Salina are wondering whether they're getting their fair share of the taxes collected by the Kansas Department of Revenue.

"We're holding our breath," said Ed Mullins, Lawrence finance director. "Whether we got too much or too little, that's the thing."

A six-month budget summary he recently completed did little to ease his mind.

While Lawrence sales taxes increased by 4.7 percent from a year ago, Douglas County's sales taxes rocketed up 13.7 percent.

"Its kind of hard to explain," Mullins said. After all, the city has "80 percent of the population and a greater percent of the retail base."

The discrepancy also is troubling to officials in the Department of Revenue, who plan to investigate.

"Typically, a city like Lawrence and Douglas County, the two should be growing together, unless there are some extenuating circumstances," department spokesman Scott Holeman said.

The department, which collects sales taxes charged by retailers and distributes them to cities and counties, has completed its shift to a new computer system, but officials remain on alert for problems.

"But so far," Holeman said, "there's a lot of confidence in the system."

That confidence is not shared by Salina officials, who have asked for a thorough audit of sales tax payments.

Salina City Manager Dennis Kissinger said his city's payments have remained constant since 1998 despite growth in the city and Saline County.

"Our economy is booming here," Kissinger said. "There's no reason in anyone's mind that retail sales are going flat."

The discrepancies have taken on heightened importance because of a trend among Kansas cities toward relying on sales rather than property taxes to fund government services, Kissinger said.

This year, Salina is receiving $10 million from sales taxes and $7 million from property taxes.

About 40 percent of Lawrence's general fund budget relies on sales taxes.

Holeman offered some hope for Kissinger and Mullins in a new state law that removes some of the confidentiality requirements on sales taxes.

This fall, cities will be able to gain access to detailed information about how much each business is reporting in sales taxes.

"It takes the mystery out of it," Holeman said.

For now, Mullins has no choice but to rely on the state's accounting.

"We do have to trust them to some extent," he said. "Sixteen million (dollars) they collect for us and send back to us. That's something we're not staffed to do."

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