Voters in November will decide the fate of a proposed 0.5% sales tax measure for the Manhattan city government that aims to generate more money toward public infrastructure, debt reduction and economic development.
If approved by voters, the 10-year tax would begin in 2023; this lines up with the expiration date of the 10-year Riley County 0.5% roads and bridges sales tax, officials said.
Because the city is in Riley and Pottawatomie counties, a citywide tax allows for collection in all of Manhattan. Officials estimate annual revenues increasing from $3 million under the current county tax to $6.5 million per year if the new tax is approved by voters.
The city government would use 70% of the tax for debt and infrastructure, 20% for economic development and 10% for workforce housing, which administrators define as a program that will create affordable housing that will draw people to the community.
If approved, the sales tax rate in Manhattan would increase to 9.45% in Pottawatomie County and remain at 8.95% in Riley County.
City administrators said the sales tax measure would assist the area in recovering from the coronavirus pandemic as well. City manager Ron Fehr said the city could use some of the generated revenue to help businesses stay open as establishments recover from the outbreak.
“We may need to do more of that to help local businesses to stay open and to keep them viable,” he said. “And so having some funding availability to be able to help with that will be a critical component.”
Fehr said this initiative would allow for some reserved money pledged for future debt service to be used for new provisions.
“That will relieve some of the existing and previously pledged revenue for other uses,” Fehr said. “So that’s really the motivation. It makes more funds available for our recovery and relief efforts and any other opportunities that develop right away.”
This measure will help infrastructure projects as a whole and keep and retain people.
“There aren’t necessarily specific projects, but generally infrastructure projects that will continue to enhance the community in that regard and make us more competitive to be able to help businesses expand, relocate here,” Fehr said.
Fehr said the sales tax measure, if approved, also will help the community with housing initiatives, workforce measures, grow the economy and improve the overall quality of life in Manhattan.
Fehr said if the tax is approved by voters, Riley County could request some funds from the city from this measure to help with infrastructure projects. The county also could pose its own sales tax question to voters once the road and bridges tax expires in two years, Fehr said.
“I think they’ll certainly have some time to work through those things,” Fehr said.
Back in August, Riley County commissioner John Ford said during a joint meeting among Riley County, Pottawatomie County and city of Manhattan leaders that he thought Riley County and the city would go their own way.
“I still get that indication now that at least of this particular item, we’re all going to have to be on our own,” Ford said in August.
If the tax passes, the Manhattan City Commission will formulate a plan and define the exact goals and where the generated funds will go, Fehr said.