When Riley County voters go to the polls in November, they’ll be asked to approve the extension of a one-half percent sales tax for infrastructure improvements, economic development and/or debt relief.
The question, proposed jointly by the Riley County Commission and Manhattan City Commission, seeks permission to continue a tax imposed for 10 years in 2002. That tax expires at year’s end. City and county officials expect the new tax to generate about $42 million in revenue over its 10-year life for the specified purposes.
The 2002 tax replaced a tax, commonly known as the Economic Development Opportunity Fund tax, which was imposed in 1994. By the time it has run its course, the 2002 “roads and jobs” tax is expected to have collected about $30 million, with $16 million going to Manhattan for economic development, $13 million going to the county for road and bridge upkeep, and the final $1 million going to small cities within the county for purposes of their choosing.
Here are some commonly asked questions regarding the proposed tax question, along with the answers.
Q. How was the money collected by the 2002 tax used?
A. The county has used about $11.6 million of the revenue to date to complete about two dozen road and bridge projects that had been prioritized as the most critical needs. Those projects ranged in scope from the $2.6 million reconstruction of Wildcat Creek Road down to several smaller culvert repairs and overlay projects. (A full list accompanies this article.)
City officials report having provided economic development incentives to 10 entities. Those incentives involved a mixture of loans, forgivable loans, grants and tax breaks. Beyond that, funds for land acquisition or building construction have been awarded to six entities. Those and other miscellaneous uses brought the total amount spent to date to about $12.5 million. Officials expect to pay out another $11 million to those firms by 2021, bringing the total economic development expenditure from the sales tax to about $23.5 million by that date.
Q. How many jobs has the 2002 sales tax created?
A. The results have varied, and in many cases are not final yet. In their public presentation being made before various civic groups this month and next, city officials claim to have created about 1,400 jobs to date, and anticipate creating another 900 through 2023. But that scenario assumes an optimal result in each case. The reality is that no one will know until the final results are in exactly how well the tax lived up to its mission.
But on a net basis, and looking strictly at numbers of jobs, it’s fair to say that companies receiving economic development assistance under the roads and jobs sales tax have generally met or exceeded the projections set for them under terms of the awards.
The best example of that to date is probably the performance of GTM, which received an $800,000 forgivable loan as well as $28 million in industrial revenue bonds in exchange for a commitment to create 339 new jobs. The company has actually created 573 new jobs, a 169 percent compliance rate.
Two other examples:
1. Meadowlark Hills received a $400,000 forgivable loan along with a $350,000 loan in exchange for a commitment to create 234.5 full time equivalent jobs here. Officials say that to date 239.15 FTE jobs have been created.
2. Flint Hills Beverage, which received a $40,000 grant in exchange for a commitment to create 24.5 jobs. It has created 27.5 jobs to date.
There is one obvious failure to date. That involves a $250,000 forgivable loan and a $250,000 loan given to Collegiate Marketing Services in exchange for a commitment to create 47 jobs. The firm created just eight before defaulting on the loan.
Many of the awards were made based on job creation projections that have several more years to run. Three examples illustrate that fluid situation.
1. Florence Corp received an $80,000 forgivable loan and a $790,000 grant in exchange for a commitment to create 250 jobs. It has created 186.5 jobs to date, continues to function, and city officials hold out the hope that it will fully meet its goal.
2. The city is using $5 million from the economic development fund to underwrite infrastructure work in anticipation of the siting of the National Bio and Agro-defense Facility here. Assuming the facility is built, it will create hundreds of high-paying federal jobs. But federal appropriations are tied up in Congress.
3. City officials only recently approved two big economic development awards, a $50,000 forgivable loan to CivicPlus and a $500,000 grant to Prathista International. Together those are expected to generate about 260 jobs over the next decade, but it is too early in the process to tell how well they will do.
Finally, several of the awards were made for purposes that do not easily translate to job creation numbers. For example, the city attributes the creation of about 70 jobs to a $1.5 million grant supporting construction of the conference center in the south redevelopment area. Since the grant was for the brick and mortar, it did not directly create any jobs, although it certainly indirectly facilitated their creation. The city also committed $1.5 million in economic development funds to the K-18 project, although there was no job creation projection tied to it.
Q. How does the city propose to use its share of the proceeds from the 2012 tax?
The city has laid out some general principles, the most specific of which is that 35 percent of the proceeds will be used for property tax relief. Based on the most commonly accepted