K.C. tax boosters surprised by planned use of revenue

? Some people who campaigned for a sales tax increase to support Kansas City’s bus system said they were surprised to learn that some of the new revenue will be used on other city projects.

Nearly $2 million from the tax approved by voters in November will go to tax increment financing projects, such as sidewalks, sewers and parking garages for developers.

“I may have misspoke, and I was wrong,” former Kansas City Councilman Ed Ford, who was among the proponents of the increase, said. “As a former public official, you hate to say things that are inaccurate.”

Kansas City voters approved a 3/8-cent sales tax increase for five years to support the city’s financially strapped bus system. Before the election, campaign promoters had indicated that all of the 3/8-cent increase would go to the Kansas City Area Transportation Authority.

But city budget director Troy Schulte said last week that state law allowed for a portion of all sales, earnings, utility and property taxes in a tax increment financing project to be redirected to developers to pay for improvements.

Ford, who co-chaired the sales tax campaign, and Ken Bacchus, a former councilman who served as the group’s treasurer, both said that they had thought the ballot language required that all of the new revenue go straight to the transportation authority — not to the city — so it would not be subject to TIF diversions.

That was incorrect, Schulte said. “State law trumps city ordinances,” he said. “The only way to avoid it (TIF) would have been to go to each developer and ask them to waive the payments or to get a new state law exempting the tax from TIF.”

TIF provides an incentive to real estate development by letting the city reimburse developers for part of their project costs with the new or incremental tax created by the project. Those are tax dollars that otherwise would have gone to such entities as schools, cities and the ATA.

The ATA’s chairman, Herb Hardwick, said that because the increase was sheltered from transportation-related expenditures such as streetlights and snow removal, some people in the campaign possibly thought it also was exempted from TIF.

Such an impression “was probably based on their understanding of the law,” Hardwick said. “I don’t think anyone consciously made a representation contrary to state law. It was probably just a miscommunication.”