Local group wants voters to reject city sales tax that would generate more than $100 million
For about the past 10 years, each time shoppers in Lawrence have opened their wallets to make a purchase the amount they pay has included an additional charge.
That charge, a .55 percent citywide sales tax, has generated millions annually for the city and will sunset next year unless voters renew it. One local advocacy group, Lawrence Sunset Alliance, is asking residents to vote no on renewal.
“In the past, I think a lot of things in this town have passed because there hasn’t been vocal opposition or at least a discussion about a yes/no and what that means,” LSA treasurer Patrick Wilbur said. “This is a 10-year renewal and repurpose, so we’re committing a lot.”
The Douglas County Libertarians began the opposition group, but Wilbur said they would like to work with a variety of local groups as part of the campaign, which launched Thursday.
If the City Commission follows city staff’s recommendation, the renewal of the additional sales tax will be on the November ballot. If approved, the special tax would be in place from 2019 to 2029 and is projected to generate more than $116 million for city infrastructure, transit and affordable housing.
In a memo to the commission, city staff state that failure to renew the sales tax would have significant consequences on city operations, as it is the primary funding source for transit and a number of projects in the city’s capital improvement plan. Infrastructure projects include dedicated funding for residential street and curb maintenance, as well as other high-dollar road projects.
Commissioner Lisa Larsen said the tax has paid for street maintenance and other infrastructure and that it’s important to renew if the city wants to continue with that level of maintenance.
“I can’t see us not having it and still being able to maintain at the level that we need to,” Larsen said.
Instead of using an extra sales tax, the Lawrence Sunset Alliance proposes that the city look to other funding sources for infrastructure, according to a news release. To address transit funding, suggestions include reducing routes, adjusting fare structures based on route length or charging fares for University of Kansas students traveling off campus. For affordable housing, suggestions include a donation campaign, bringing in more high-paying jobs and reducing regulations or fees to lower construction costs.
Wilbur said the main message of the opposition campaign is that sales tax is regressive, meaning that unlike property taxes, it disproportionately affects those with lower incomes.
“We’re basically putting the burden on lower-income people for these services,” Wilbur said. “These are all services that we could fund through the general fund if we wanted to.”
Currently, the .55 percent sales tax breaks down as follows: .3 percent for infrastructure, .2 percent for transit and .05 percent for expanded transit service. Under the upcoming sales tax renewal proposal, the .05 percent would be repurposed to fund the city’s affordable housing trust fund. If not renewed by Lawrence voters, the taxes will sunset in March 2019.
Larsen said there is no way around the fact that sales tax is regressive, but that the alternative is to increase the property tax rate. She said she thinks the 10-year limit on the sales tax helps keep it in check for future use.
“Unless we can find some other way to fund it, that’s where we’re at right now,” Larsen said. “And we’re always looking for different ways to fund things, but this is what we have right now.”
When combined with the county and state’s sales tax rates, Lawrence residents pay 9.05 percent on their purchases, which in Kansas includes groceries. The sales taxes are in addition to the 1 percent general city sales tax and generated $9.8 million to support infrastructure and transit in 2016.
The sales tax was passed with strong support from voters in a citywide election in 2008. Almost three-quarters of city voters, or 73 percent, approved the measure.
City staff are recommending that the City Commission approve an election for the sales tax renewal, which would allow voters to consider each of the three components of the tax individually. If renewed, the city projects the taxes to generate more than $63 million for infrastructure, $42 million for transit and $10.5 million for affordable housing over a 10-year period.
The deadline for questions to be placed on the Nov. 7 ballot is Aug. 7 and the City Commission must approve the ballot language no later than Aug. 1.