Advertisement

Archive for Monday, May 20, 2002

City may impose extra sales tax

May 20, 2002

Advertisement

Lawrence businesses could be required to charge an extra sales tax to build or improve the roads where they're located under a new state law signed last week by Gov. Bill Graves.

House Bill 2949 gives cities and counties authority to levy an excise tax on goods and services sold within "transportation development districts" that benefit from the creation or improvement of those roads.

Until now, the city has most often created "benefit districts" to levy additional property taxes in a similar arrangement. The excise tax option wasn't available.

Assistant City Manager Dave Corliss said the new law could help the city shift some of the costs of new and improved roads away from taxpayers in the city at large to customers of specific businesses. He helped craft the bill with officials from Olathe and the Kansas League of Municipalities.

"This bill gives us an additional tool, but it's not the only tool," Corliss said. "We might not even use it."

Because of the nature of the excise tax, he said, transportation development districts probably would be limited to road projects in commercial areas of town perhaps an area like 31st and Iowa streets, where the city is using a benefit district to help pay for intersection improvements in conjunction with the construction of a Home Depot store.

"A lot of properties don't generate sales tax," he said. "This wouldn't work in a residential area."

Even in commercial corridors, Corliss said, the new taxing mechanism might be of limited use.

"It seems particularly helpful when you're retrofitting public improvements in a commercial area," he said. "It won't be as helpful for brand-new areas that won't generate sales tax for some time."

The bill was passed so quietly that local developers and business leaders said last week they weren't aware of it. And they weren't quite sure how to react.

"It's potentially a great tool to spur development throughout Kansas ... and add to the tax base," said Tim Holverson, vice president of public policy for the Lawrence Chamber of Commerce.

But he said the additional sales tax would be "a competitive disadvantage, potentially. I guess I would question how often that tool should be used, given the success the city has had with benefit districts."

Martin Moore, a longtime Lawrence developer, agreed.

"Excise tax is a word that scares the heck out of developers," he said.

That reluctance could be enough to derail any attempt to create a transportation development district in Lawrence. Local governments could create the district only after receiving a petition from the owners of property within the district. And the tax which could never exceed 1 percent would be subject to a protest petition and election procedure.

"With the (general) sales tax going up," Corliss said, "people may say 'No way.'"

Commenting has been disabled for this item.