The sales tax analysis provided by City Commissioner Jim Sherow provides a compelling argument but may not have contained all of the variables.
Three additional variables must be considered. The first is the fact that 30 to 40 percent of the sales taxes generated are from individuals who do not live in the city. The sales tax revenue generated by nonresidents is of substantial benefit to all city property owners, not just the wealthy. The second is that any sales tax paid is not based on your annual income but on your disposable income, the amount you might actually spend. The third factor is that elimination of the tax does not guarantee elimination of economic development incentives.
Those pushing for continued economic development may lean toward tax abatements and the use of general fund revenue to support business enticement. A re-crunching of the numbers adding in the these three variables indicates that the tax may provide a net benefit of about $48 to $96 for the owner of a house with a market value of $207,000 and an assessed valuation of $23,805.
Should you vote for the tax? You can watch the power point slide show that will be presented by the county, city and chamber of commerce; it will explain the benefits and cost of the tax. It is possible to draw any number of conclusions, depending on how you slice the numbers.
Vote against the tax and the property tax levy for the county and city may go up 9 to 10 mills. You have to figure out if that is really going to be less than the amount you pay in a half-cent sales tax. Another factor is the whole concept of economic development. If the tax does sunset, does that change anything? Does it end economic development or does economic development just become part of the general fund or be tied to tax abatements? Deficit spending on economic development funds has already taken place in three areas: K-18, administrative cost (salaries for city administration) and continuation of DMI. Sunset of the economic development tax may not do away with expenditures; instead, they may become part of the general fund obligation and be added to property tax bills.
I believe that the City Commission as a group crafted the best possible resolution for presentation to the voters The tax language was crafted to provide the broadest interpretation and to be inclusive of the desires of the population. The City Commission did not have the ability to prevent the tax from being placed on the ballot. The commission’s only course of action was crafting the resolution to explain expenditures. Some on the commission supported 100 percent use of the funds for economic development; others wanted 100 percent for property tax relief. A compromise was reached, and now the voters need to determine the final outcome.
If the tax fails, it leaves open a future one-fourth cent citywide tax for debt relief and infrastructure and it lowers the county and city tax rate by a half-cent. Failure likely will also result in increased future city and county mill levies and limit the continuation of economic development initiatives.
If the tax passes, it will provide some immediate property tax relief, support some selected infrastructure projects and continue economic development efforts on a smaller scale.
I support the resolution passed by the City Commission that outlines the possible use of the continued Riley County half-cent sales tax. I also support a spirited discussion of the facts surrounding the tax. The voters will determine the fate of the tax in November. My personal goal is to continue to strive for responsible growth, support of needed infrastructure and frugal use of tax dollars. I will continue pursuit of that goal with or without the half-cent sales tax.
Wynn Butler, 3600 Windsong Court, is a Manhattan city commissioner.