A property tax increase may be in store for Lawrence residents, and a question about creating a new sales tax might be coming their way, too.
Lawrence city commissioners on Tuesday moved one step closer to approving a property tax rate increase of 0.92 mill, but a majority of commissioners also said they want to talk about a sales tax increase that could take effect as soon as the middle of 2013.
Mayor Bob Schumm said he wants to discuss an approximately half-cent sales tax increase that could be used to fund both police department needs and economic development initiatives. Schumm said he would want the sales tax to go on the books after the state reduces its sales tax by six-tenths of a cent in July 2013.
“That way you really wouldn’t be raising taxes,” Schumm said. “You would be reapportioning it. Instead of the state using the money, we would be able to use it locally.”
Any new sales tax would have to be approved by voters in a citywide election. Commissioners on Tuesday took no action to place a sales tax question on an upcoming ballot, but commissioners said they want to discuss the issue more at a future study session.
The tax idea was met with skepticism by City Commissioner Mike Amyx. He urged commissioners to first look at the existing countywide 1-cent sales tax to determine if city spending from that fund could be rearranged to better meet some of the city’s needs for the police department and other projects.
“Taxpayers have been paying what I think is fairly high sales tax already,” Amyx said. “It is scheduled to go down. Before we add a new tax, we need to look hard at living within our means.”
City commissioners took more concrete action — although not final action — on raising the property tax rate for 2013. Commissioners agreed to publish a budget that includes the 0.92 mill increase. City Manager David Corliss had recommended a 0.87 mill increase, but commissioners increased the number after Schumm lobbied to provide an additional $37,000 in funding to the Lawrence Community Shelter to help the organization with its finances. Schumm also was able to add $7,600 in funding for Hearthstone House, a nonprofit drug and alcohol treatment program.
The funding and the increased mill levy won’t become final until commissioners approve the budget at their Aug. 7 meeting. Several commissioners said they may seek to cut other parts of the city budget before the Aug. 7 hearing to reduce the mill levy increase.
A 0.92 mill increase would amount to a $21-per-year increase in property taxes for a $200,000 home. A mill is $1 dollar in property tax for every $1,000 in assessed valuation.