Mediation for sales tax dispute?

City, county still at odds over frame of renewal

By Burk Krohe

City and county officials once again discussed options for the renewal of the countywide half-cent sales tax Thursday, with county officials indicating they will seek the opinion of an uninvolved third party on the matter.

Renewal of the tax, which was passed in 2002 and sunsets at the end of the year, has been contentious. The county has used its portion of the revenues for infrastructure improvements, while the city has used its portion of the revenues for economic development opportunities. Additionally, smaller communities within the county receive a portion of the tax revenues, which they use for purposes determined by their local governments.

County officials prefer using language comparable to the 2002 question in order pass a similar half-cent sales tax. They feel, based on legal counsel, that the ballot language from 2002 requires the county to present the same question to voters again. However, a majority of city commissioners have expressed preference to move away from that and contend the question could be more flexible.

“We really have tried to be as flexible as we can, but our legal advice has been we need to put it back on as is,” Karen McCulloh, county chair, said. “We can’t just ignore legal advice we’ve been given.”

County commissioners said they will seek the Attorney General’s opinion on the issue. They hope to determine whether the county actually is required to present the same question to voters again. Despite indications from previous meetings, McCulloh said the county now prefers posing the question on the November ballot instead of the August ballot.

City commissioners were receptive to the county’s aims but continued to push for an alternative approach to the sales tax. Mayor Jim Sherow presented county commissioners with information on the implications of a citywide half-cent sales tax. Sherow said the citywide sales tax would garner more revenue for the county and the city due to the captured revenue from the portion of the city in Pottawatomie County.

He said the citywide sales tax revenues would be split three ways, a third to the county, a third to the city for economic development and a third to the city for debt reduction.

Sherow also proposed a set of principles to guide the process as the two entities move forward. The principles include, the county maintaining complete control over its portion of the proceeds, a ten-year lifespan for the sales tax, and an interlocal agreement between the city and county.

McCulloh said there seem to be advantages and disadvantages to the proposal.

“I think one of the things that concerns us is the lack of money for the small cities,” McCulloh said. “We do represent the small cities, too.”

But she added a citywide sales tax could allow the city to extend economic development funds into Pottawatomie County. Commissioner John Matta speculated that a citywide tax could also result in Pottawatomie County demanding a portion of the proceeds.

Commissioner Wynn Butler said he preferred two separate taxes, a countywide quarter-cent sales tax and a citywide quarter-cent sales tax. Butler said it would meet each entities’ goals, noting the countywide tax would provide funds for small cities in Riley County.

“The beauty of that is it’s very clean to the voters,” Butler said. “I think it just clears up all the discrepancies we have.”

However, Sherow said two competing taxes on one ballot could be an obstacle. He said the majority of voters in the county are located in Manhattan, and they might not see the benefit of voting for a countywide sales tax as well as a citywide sales tax.

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