Mayor Mike Amyx wants voters to approve a new 1 percent, 10-year sales tax that would give the city $120 million to repair streets, reduce property taxes and address infrastructure issues.
Amyx made the proposal - which also would include money for sidewalks, North Lawrence drainage improvements and a unique "city endowment fund" - late Tuesday evening as city commissioners struggled at their weekly meeting with the idea of raising the city's property tax rate for the 2007 budget.
"I think we're at the point that we're either going to have to have a property tax increase or find another stream of money," Amyx said. "I think we really have to discuss this (sales tax) now. We have to have a long-term plan to take care of what I consider failing infrastructure."
Any new citywide sales tax would require voter approval. Amyx did not propose a specific date for an election, but he also did not rule out putting the issue on the November general election ballot.
Amyx's fellow city commissioners stopped short of backing the idea, which would be necessary before it could be placed on a future ballot. Instead, commissioners expressed guarded interest.
"I want to congratulate the mayor for his willingness to do what people are elected to do, and that is lead the discussion," City Commissioner David Schauner said. "I'm more than intrigued by the mayor's suggestion. I think it deserves some serious discussion and some public debate."
Commissioner Boog Highberger expressed the most serious concerns about the idea, citing the effect a higher sales tax could have on low-income residents.
"I want to make sure that we run through the numbers and see how it affects different types of families," Highberger said.
Sales tax issues also generally are viewed to have significant effects on businesses that sell large-ticket items such as automobiles, furniture and other goods that consumers may be tempted to drive out of town to buy.
Up to 8.3 percent?
A 1 percent sales tax increase would raise Lawrence's total sales tax rate to 8.3 percent.
"I know we're going to have to go through an education process before we would put it on the ballot," Amyx said.
Commissioners indicated that they would want to discuss the idea of putting the issue on a ballot at a future City Commission meeting but set no specific date. Next week's meeting already has been canceled. Commissioners next meet on Aug. 8.
Specifics of Amyx's plan look like this:
¢ The 1 percent tax would automatically expire or "sunset" after 10 years.
¢ Based on current projections, a 1-cent sales tax would generate about $12 million per year, or more than $120 million over the 10-year period.
¢ About half - or $60 million - of the sales tax revenue would be dedicated to rebuilding city streets that have been rated as unacceptable by a city study, adding sidewalks to areas of town where gaps currently exist and tackling millions of dollars in stormwater drainage improvements for North Lawrence.
¢ The remaining $60 million would be used to establish a city endowment fund. The city would use the $60 million in principal to invest in interest-bearing accounts. Annual interest payments on the accounts could be used to fund street maintenance and other issues. Amyx is proposing that the endowment fund also come with an ordinance that would prohibit city commissioners from tapping into the fund's principal, except in city emergencies that would require a supermajority vote of the commission.
¢ The new sales tax money would allow the city's property tax rate to be reduced by an undetermined amount, although Amyx suggested upward of 6 mills.
Mill levy increase
Amyx proposed the sales tax after commissioners struggled this month with a recommendation from interim City Manager David Corliss that the city's property tax rate be increased by 0.98 mills to help fund an increase in street maintenance.
The mill levy increase, when coupled with expected increases in assessed home valuations, would amount to an extra $50 to $60 per year in property taxes.
Commissioners agreed to proceed with publishing the budget as recommended - with the mill levy increase - but they aren't scheduled to give final approval to the budget until Aug. 8. Commissioners still could choose to reduce the budget and the mill levy increase at that time.