Archive for Wednesday, October 17, 2012

Edwardsville seeks to diversify tax base through sales taxes

October 17, 2012

After Edwardsville’s last sales tax ballot question failed by just a handful of votes in 1996, Mayor John “Tiny” McTaggart said he spoke to a waitress in a city restaurant who voted against the tax.

So he emphasized to her that a sales tax would likely be more of a burden for people coming to the city than those living in it.

“I said ‘Look around this room,’ and there were 10 or 15 people,” McTaggart said. “I said, ‘How many of them live in Edwardsville besides me? None. The people that are in here pay sales tax to come to Edwardsville.’”

The city will ask voters to consider two separate quarter-cent sales taxes on November’s ballot. Mike Webb, city manager, said Edwardsville is one of the only cities in the area which does not have a supplemental sales tax: it is surrounded by cities that use sales taxes for parks, public safety or infrastructure. City officials have been discussing increasing sales taxes for years because they take some of the tax burden off residents and put it on others using the city’s services, he said.

Webb said residents told the city that the thing that concerned them about 1996’s sales tax ballot question was that it did not specify how the funds would be used. So this election’s ballot questions have much more specific uses.

The first ballot question asks for a quarter-cent sales tax to support public safety in the city, much like the tax in Bonner Springs. Funds generated by the tax would be used for improvements to the fire station and police station, enhancement of outdated in-car video systems equipment, updated communications equipment and replacement of fire trucks.

A second ballot question asks for a quarter-cent sales tax to support the city’s parks and recreation. The city states the funds would be used to upgrade the concession stand and restrooms in Edwardsville City Park, expand walking trails, rehabilitate existing baseball fields and acquire additional park land.

Both taxes would begin collection on April 1, 2013, and would expire in 10 years.

Both taxes would benefit city services used by nonresidents, Webb said. For example, the city’s parks and recreation soccer program largely serves residents from Basehor, Kansas City, Kan., and even Johnson County. And the large expenses associated with providing emergency services for nonresidents using the industrial park or just passing through is too much of a burden to place on property taxes, he said.

“When you put these sales taxes in, you are able to capture the nonresidents who are still using resources,” Webb said. “So somebody stops at the convenience store down off the freeway and has a medical issue, our fire department responds... They didn’t go home to where they live, but we still have the expense of providing the services.”

Webb said the city has been fortunate to receive grants for the police department in order to keep most equipment up to date. But the city is facing some large public safety expenses in the future, he said, especially for the fire department.

The current city sales tax is 1 percent, and when added to the state and county sales taxes, the total tax rate is 8.3 percent. In comparison, Bonner Springs’ rate is 9.05 percent and Kansas City, Kan., ranges from 8.925 percent to 10.025 percent, due to tax incentive districts with higher rates.

City officials found most sales taxes in the city are not paid by residents, citing traffic patterns that show most vehicles pass through the city and the fact that the top five sales tax generators in the city are a convenience store, a general retail store, a leasor of tractor trailers, and two area utilities.

“If they’re selling 18-wheel tractor trailers and stuff like that, that’s not your typical resident buying it,” Webb said.

“My guess is that somewhere near 90 percent of the (sales tax) money that comes into this city comes from outside,” McTaggart added.

Sales tax revenues in the city have been stable if not growing, as well, even in bad economic times. Webb said each sales tax, if passed, is estimated to generate $90,000 to $100,000 annually.

No known opposition group has formed for the sales tax questions.

The city had its first informational session for the ballot questions Tuesday but has planned a second, 10-10:30 a.m. Saturday, Oct. 27, at the Edwardsville City Park Shelter, 1200 Blake St.

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