What would a sales tax increase go to?

Infrastructure projects planned

Voters will go to the polls Nov. 4 to decide whether to create a new three-tenths of a percent citywide sales tax to fund a variety of infrastructure projects.

The infrastructure sales tax is listed as Question No. 1 on the ballot.

Here’s a look at several of the issues and questions surrounding the vote:

Q: How much will this cost me? How much will the city make off this?

A: Three-tenths of a percent equates to 30 cents for every $100 worth of taxable purchases people make in the city limits. The tax – which wouldn’t kick in until April 1 – will generate an estimated $2,255,900 for the city in 2009. In 2010, its first full year of existence, it is estimated to generate $3,945,000.

Q: Who has to pay this sales tax?

A: Anybody who buys taxable merchandise in the city limits. The city is estimating that 30 percent of the revenue will be generated by people who don’t live in the city but come to the city to spend money.

Q: Will this sales tax ever go away?

A: The ballot language specifically says the sales tax will sunset – in other words, expire – after 10 years. The only way the tax will continue beyond 10 years is if city commissioners decide to put it on the ballot again and voters approve it again. Commissioners can’t decide to extend it on their own.

This sales tax is unlike a countywide sales tax that voters approved in 1994. Contrary to what some folks are saying these days, that sales tax proposal never had a sunset provision.

Q: How’s the city going to spend this money?

A: In several ways.

The largest amount of the tax collections over 10 years would be devoted to reconstructing various city streets. The most recent scenario from the city indicates that over 10 years, the city would spend about $22 million to rebuild parts of four major streets – Bob Billings Parkway, Kasold Drive, 19th Street and Wakarusa Drive.

Another $5 million would be used to build a stormwater pump station at Fifth and Maple streets in North Lawrence.

In addition, the city says it will spend $500,000 a year on residential street maintenance and sidewalks – particularly in older areas of town – and $500,000 a year to purchase new fire trucks. The city also has proposed using $350,000 to cover its share of the proposed Burroughs Creek Rail Trail in East Lawrence.

Q: Has the city settled on the street projects that it will undertake if this is passed?

A: Sort of. The accompanying graphic shows more details on the four major streets that the city says are the “most likely” to be rebuilt. But the sales tax language is not written in such a way that it commits the city to doing those specific projects. And since the work is expected to take place over a 10-year period, future commissioners ultimately will decide what road projects to spend the money on.

Q: Is there anything that stops the city from spending this money on any type of project?

A: Yes. The wording of the ballot language does limit the type of projects the city can use the sales tax money for. Specifically, the ballot language says it must be spent on “maintaining public streets and sidewalks,” for a stormwater pump station in North Lawrence, “recreational path infrastructure” and for “purchasing fire apparatus.” But the ballot language does not get into the specific locations of projects, other than saying the pump station is in North Lawrence.

Unlike the 1994 sales tax, this tax does not include a clause allowing the money to be spent on any general governmental purpose. So, for example, the city won’t be able to use this sales tax to build new recreation centers, hire new police officers or any of those other general expenditures that sales tax money has been used for in the past.

To ensure that is the case, the city has proposed creating an audit committee made up of Lawrence residents to review how the sales tax money is spent.

Q: Will any of this money be used to build new roundabouts?

A: No, said City Manager David Corliss. None of the sales tax money will be used to build new streets. It will only be used to rebuild existing streets or maintain existing streets.

Q: What is the Burroughs Creek Rail Trail?

A: It would be a 10-foot-wide, concrete trail open to use by both pedestrians and bicyclists. It would run from Hobbs Park near 11th and Oregon streets to 23rd Street, where it would connect with an existing hike and bike trail at Haskell Indian Nations University. The new trail’s route would follow the abandoned Burlington Northern Santa Fe Railroad line, which is just west of Haskell Avenue. The city has received a $500,000 state transportation grant to help pay for that project. The city must come up with about $350,000 in matching funds in order to accept the grant.

Q: I thought my property taxes were being used to fix streets?

A: They have been. The city in 2009 will spend at least $4.2 million on street maintenance regardless of whether the sales tax passes. City commissioners, though, have argued they need more money because city streets are in poor condition. A ranking of city streets by the city’s engineers estimated that 35 percent of all city streets need to be rebuilt. Improved street maintenance also was the issue that rose to the top of the list of concerns in the city’s 2007 Citizen Survey.

Q: How did the city’s streets get in such condition?

A: City leaders have conceded that many of the major streets in the city previously were built on substandard bases, in part because the city didn’t have the funds to build the streets to a higher standard, Corliss said. The city has adopted new engineering standards that require roads to be built on a more solid base in the future.

Beyond that issue, however, arguments can be had about whether the city historically has spent enough on street maintenance. Several times, commissioners have reduced their street maintenance budget as a way to prevent increasing property taxes or cutting other services. For example, as part of the 2007 budget, the previous city commission did not accept a recommendation by city staff to include an additional $700,000 in the budget for street maintenance. That was, in part, because commissioners could not figure out how to do so without raising property taxes. Also in 2004, the commission reduced the city’s street maintenance budget by about $200,000 as a way to avoid a property tax increase.

Q: Will this sales tax fix the city’s street problem once and for all?

A: No guarantees there. The city has conceded that even with the sales tax, it will not have enough money to address all the streets that need to be rebuilt in the next 10 years. In other words, it won’t address the entire 35 percent of streets that need to be rebuilt. But city leaders do believe this money will go a long way in stopping additional streets from deteriorating to the point that they need to be rebuilt, and will address a “significant” amount of the 35 percent that are in an unacceptable condition.

Q: I don’t understand why the city doesn’t have enough money to take care of these needs without a sales tax. Haven’t property taxes been going up?

A: In general, property taxes have been going up. There’s lots of statistics about mill levies and assessed valuations that we could throw at you here, but instead we’ll do this: In 1998, the city property tax bill for a $100,000 home was $259 for the year. In 2008 – if that same home rose in value at the average rate of Douglas County homes – the city property taxes will be $574. The city’s property tax rate has increased from 22.596 mills in 1998 to 26.688 mills for 2008. But the city has collected significant amounts of new tax dollars as the result of many homes increasing by 60 to 80 percent in value during the last 10 years. City leaders also note that the cost to maintain streets has gone up dramatically as oil prices have increased. And Corliss said that while the city has undertaken cost-cutting measures, there has been no community consensus on what city services should receive major reductions or be eliminated.