City of Wichita Sales Tax Measure (November 2014)

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A City of Wichita Sales Tax Measure ballot question was on the November 4, 2014 election ballot for voters in the city of Wichita in Sedgwick County, Kansas. It was defeated.

The measure would have implemented a 1-cent local sales tax for five years. The money raised by the tax over its five-year life, an anticipated $400 million, would have been split among various accounts to fund city projects. The additional revenue generated by the tax would have been earmarked for the following uses:

• $250 million to develop a long-term water supply for the city,
• $80 million for a job development fund overseen by a public/private commission,
• $39.8 million for public transit, and
• $27.8 million for street maintenance and repair.

The measure was placed on the ballot by a 6-1 vote of the city council on August 5, 2014.

Election results

Wichita Sales Tax
Result		Votes	Percentage
d No		64,487	62%
Yes		38,803	37%

Election results via: Sedgwick County Elections Office

Background

At the time of the measure's defeat, Wichita was one of the few cities in Kansas without a local sales tax. In a survey done by the Kansas Department of Revenue, 78 percent of cities and 100 percent of the counties surveyed had a local sales tax. The cities that did not have a local element tacked on to the 6.15 percent state sales tax were concentrated in the Wichita metro area. Besides Wichita, Goddard, Valley Center, Mulvane, Park City and Newton did not levy a local sales tax prior to November 2014. Goddard and Mulvane, however, also voted on a 1 percent local sales tax in November 2014.

Gary Schmitt, chairman of the Greater Wichita Economic Development Coalition, was a supporter of including the $80 million job fund in the sales tax revenue plan. He proposed that Wichita should look at other cities with sales taxes to see what the results were and see if such a tax would be a good fit for Wichita. Schmitt said:

"Wichita Sales Tax Forum," August 9, 2014

“	What they do matters. How many dollars are we bringing in and did it actually lower our property taxes? What do they have a sales tax for? What was the rationale? Are the taxes evergreen or do they end? We have to look at all these factors to determine whether we’re the last holdout and whether a sales tax is the answer for us. The question is: How do we remain competitive?	”
—Gary Schmitt

Below is a break down of sales tax rates imposed by cities within the Wichita metro area as of August 2014:

• Wichita - 0%
• Valley Center - 0%
• Park City - 0%
• Haysville - 1%
• Derby - 0.5%
• Mulvane - 0%
• Andover - 1%
• Augusta 2%
• Goddard 0%
• Newton - 0%
• El Dorado - 1%
• Wellington - 1.5%

Major Kansas cities outside the Wichita area feature the following sales tax rates as of August 2014:

• Coffeyville - 3%
• Hutchinson - 0.75%
• Winfield - 1.4%
• Salina - 0.9%
• Manhatten - 1.25%
• Hays - 1.75%
• Goodland - 0.25%
• Liberal - 1.5%
• Dodge City - 1%
• Garden City - 1%
• Overland Park - 1.125%
• Lenexa - 1.375%
• Olathe - 1.5%
• Emporia - 1%
• Topeka - 1.5%

Support

Supporters

• Envision
• National Federation for the Blind
• Wichita Metro Chamber of Commerce

Arguments in favor

Supporters of the sales tax believed the revenue allocated to the jobs fund would spur growth in the city, which lost 31,000 jobs since the 2008 recession. The jobs fund portion, which was compiled in part by the Wichita Metro Chamber of Commerce, was designed to be used "toward physical infrastructure, work force training and certain company relocation and expansion costs."

Harvey Sorenson, speaking in favor of the sales tax, said, “Our town is dying it is dying a slow death of stagnation as our young people leave the community and find jobs elsewhere.”

Robert Layton, the Wichita City Manager, said, “Wichita has potentially a big problem with its water supply that will affect economic development, and Wichita has not had the opportunity to make an investment in creating the ecosystem that supports the diversification of the technology base of the city."

Gary Schmitt, chairman for the Greater Wichita Economic Development Coalition (GWEDC), said, “I think it’s a great plan. It’s exactly what we need as far as economic resources in our community to drive jobs." He continued, "WSU is a great partner, and GWEDC, the Wichita Downtown Development Corporation, the city, county, WSU and other groups in the community will be able to work together to grow our economy and increase primary jobs in our community."

Opposition

"Koch Industries opposes Wichita sales tax increase," August 11, 2014

Opponents

• Coalition for a Better Wichita

Arguments against

Opponents of the sales tax, including some business leaders, criticized it as regressive and believed it would be detrimental to low-income earners and small business owners, who may be forced to raise prices as a result of the tax. Jennifer Baysinger, of Coalition for a Better Wichita, believed the city should champion the fact that it has no local sales tax. She further said the lack of a tax would be a better driver of growth than a jobs fund. In an editorial for The Wichita Eagle, Baysinger wrote:

“	The distribution of the economic development fund will be determined not by our elected City Council but by an appointed board including business leaders who would be eligible for “jobs fund” money, as 80 percent is earmarked for local businesses already in Wichita. This plan lacks transparency – a main concern of citizens I speak to who know that backroom deals with favored companies are not the way to grow Wichita’s economy.	”
—Jennifer Baysinger

Sean Hatfield, a local attorney, said:

“	This proposed sales tax will hit the poor disproportionately. For many of Wichita’s hard-working families, the vast majority of their purchases that they make regularly will be affected by this sales tax. We don’t need more spending from city hall. We need smarter solutions. The money isn’t the problem. It’s the management.	”
—Sean Hatfield, an attorney in Wichita

"WichitaLiberty.TV: Citizen activists and the proposed Wichita sales tax," July 10, 2014

Spending the revenue

Water supply

62.5% - $250 million

The city's sales tax measure would have dedicated 62.5 percent of the additional revenue to create a long-term water supply system for the city. City staff considered three options for the city's long-term water supply needs:

• purchasing already treated water from El Dorado
• buying untreated water from El Dorado and treating it before delivery
• creating the Aquifer Storage and Recovery (ASR) system.

The city's research team recommended the ASR option, which, according to the report, would have allowed for a lower sales tax rate than the other two options. The initial report showed that the capital cost needed to implement all three systems was about $250 million, and the operational costs for purchasing water would be about $600,000 per year, with the ASR costing about $1.6 million to operate. When the cost of actually purchasing the water from El Dorado were added to the calculations, a cost not present with the option of the independent ASR system, city officials and staff estimated that the ASR system would be far less costly than the other options long term. Below is a chart showing the projected costs of each plan through 2060:

The final city report estimated that the construction of the facility would cost $200 million, but recommended that the city dedicate $250 million to the project to cover unforeseen costs or complications. The money would be used for the following projects:

• Raw Water Facility - $9,515,921
• Sidestream Storage - $29,784,833
• New Wells & Improvements - $68,221,224
• Parallel Pipeline - $86,579,022
• Other Improvements - $5,899,000
  

Total: $200 million

Economic development

20% - $80 million

City-produced chart comparing employment in Wichita with other key cities

According to a report by the city staff, Wichita's economy was especially damaged by the recession and was building back up slowly. The report showed that Wichita had only reached employment levels slightly above those seen in 2005 and, since 2005, experienced lower growth than any other Midwestern city.

The sales tax measure, if approved, would have earmarked 20 percent of revenue to fund the operation of an independent commission dedicated to boosting the economic health of the city and revitalizing the job market. The commission would have been appointed by the Wichita City Council and led by private sector business people.

Below is a chart showing the operation, organization, goals and proposed activity of the commission.

The fund overseen by the commission would have used incentives to urge expansion within current businesses or the recruitment of new businesses to the city. The goal of the commission would have been to produce 20,000 new jobs within five to seven years. According to the city report, most of the fund's money would have been spent on workforce training and the improvement of buildings and other physical assets. The remainder of the fund's assets would have gone towards reimbursements for business expansion and relocation costs. Specifically, the $80 million would have been spent in the following way:

“	40% for infrastructure - $32 million: Expenditures would be for hard assets that remain in Wichita, and would be tied to new primary jobs. Items could include: Project specific roads and sewers (new or upgrades) WSU Innovation Campus sewer (upgrade for new buildings/companies) Potential for Broadband internet Railroad spurs as needed Upgrade or new runways as needed Potential land purchase 40% for workforce training - $32 million: Expenditures would be for soft assets (our people) most of which many remain in Wichita, and would be tied to new primary jobs. Items could include: New worker skills Retraining for new and emerging industries/diversification Working with local education and training institutions, such as: * Wichita State University * Wichita Area Technical College and the National Center for Aviation Training * Summer employment and internships for youth * Career counseling programs * Other colleges and universities in community 20% for expansion/relocation costs - $16 million Funds would be used to offset costs associated with expanding or moving locations, and would be tied to primary jobs. Items could include: Reimbursement for the cost to move large equipment Architectural or engineering planning related to company expansion of new jobs Reimbursement for relocation costs for new companies Investing in research and development, such as robotics and other technologies at the National Institute for Aviation Research	”
—Wichita city staff report

Public transit

9.95% - $39.8 million

According to the measure, $39.8 million of the proposed revenue would have been used to make improvements to the public transportation system in Wichita. The goals that the city hoped to achieve over five years through revenue from this sales tax included:

• reducing the average age of transit vehicles from 8.18 years to 6.32 years
• increasing annual ridership from 2 million to 2.7 million
• increasing passengers per hour from 16 to 20
• increasing the percent of costs covered by fares from 15 percent to 17 percent

The following chart was provided by the city to show how the public transit portion of the tax revenue would have been spent:

Road maintenance

6.95% - $27.8 million

Chart showing PCI of city from 2004 - 2013

Prior to the measure's defeat, the city spent about $8 million per year on street repair and maintenance. In the measure, the council proposed to spend $27.8 million more over five years. With the combination of the standard budget item and this additional expenditure, a total of $67.8 million over five years, the city hoped to repair 1,964 lane miles of streets by 2019.

Path to the ballot

See also: Laws governing local ballot measures in Kansas

On August 5, 2014, the city council referred the measure to the November ballot in a 6 to 1 vote. In the days leading up to the decision, it was initially unclear which way the council would vote. Ultimately, though, a majority of the members believed voters should have the final say on the matter, with Council member Jeff Longwell remaining the lone dissenter. Longwell explained he believes all four issues funded by the potential tax — water, jobs, transit and streets — are vital to the city, but he thought supporters of the measure would have a difficult time promoting their message in the shadow of several other high-profile November elections.

See also

• City tax on the ballot
• Local sales tax on the ballot
• Local ballot measure elections in 2014
• Sedgwick County, Kansas ballot measures

External links

Suggest a link

Basic info

• City of Wichita, Kansas website
• Wichita City website, "Sales tax information documents," accessed August 14, 2014

Opposition

• Coalition for a better Wichita facebook page

Additional reading

• Watch Dog Wire, "WHAT THE WICHITA CITY COUNCIL COULD DO TO IMPROVE LOCAL GOVERNMENT," August 11, 2014
• Wichita City Elections Office, "Water Supply White Paper information document," archived August 14, 2014
• Wichita City Elections Office, "Economic development White Paper information document," archived August 14, 2014
• Wichita City Elections Office, "Public Transportation White Paper information document," archived August 14, 2014
• Wichita City Elections Office, "Pavement Preservation White Paper information document," archived August 14, 2014
• The Wichita Eagle, "Eagle editorial: Join the sales-tax debate," August 6, 2014
• KWCH12, "Koch critical of incentives after taking millions from state," August 13, 2014
• Wichita Business Journal, "Koch will oppose Wichita sales tax referendum," August 7, 2014