Sales tax angst and short memories

In the past week or so, a vocal group of dissenters has risen up in opposition to a 1/4 cent sales tax in Hutchinson that’s up for a vote in November. The tax, which has been in place since 1994, is used to pay for road improvements, the Cosmosphere, Strataca and property tax relief.

This article offers some good details on the issue. Here are a few excerpts:

“In 2016, Strataca’s portion was $112,310 or 15.6 percent of its budget. The salt mine museum opened in 2007 and became part of the sales tax in 2009, according to Reno County Historical Society Executive Director Mary Grace Clements.”

“Cosmosphere CEO Dick Hollowell said last year’s value of $741,247 was 15.6 percent of the organization’s budget, which is much less than other museums.”

“The 47 percent used for street and sidewalk repair raised just over $1 million last year. The 5 percent property tax relief amounted to $336,930.”

Here’s an informational page by the city, if you want to see more information: http://hutchgov.com/quartercent

But not everyone is a fan of this tax. The past week has brought out a lot of chatter about how terrible this tax is, and how the public should vote it down. There’s a Facebook group that’s against it, though it looks like it’s run by the sort of people who think everything can be built with bubble gum and bailing twine. https://www.facebook.com/Vote-No-On-More-Sales-Tax-In-Hutchinson-KS-930447963786989/

I imagine that the people against the 1/4 cent sales tax are the uber conservative types. You know, the sort of people who don’t want to pay a nickel in taxes, then call the city up after a big snowstorm to complain about how the city hasn’t come and plowed the snow from their residential streets.

Hutchinson’s sales tax is too high. I agree with that. We have some places in town where it’s more than 11 percent. That’s not good for shoppers or retailers. We are at the top end of tolerance for sales tax, and we should back away from that if we want to retain much capacity for financing improvements through sales tax in the future.

I would argue, however, that people are mad at the wrong tax – and at the wrong groups of people.

Here is the breakdown of sales tax in Hutchinson, courtesy of the Department of Revenue.

State of Kansas – 6.5%

Reno County – 1.5%

City of Hutchinson – 1.10%

Special tax district – 1.0%

Total – 10.1%

Another part of town – out by the mall, I think – is higher, thanks to a special tax district.

State of Kansas – 6.5%

Reno County – 1.5%

City of Hutchinson – 1.10%

Special tax district – 2.0%

Total – 11.1%

Despite the high tax rate in Hutchinson, I’ll vote for this tax. Here’s why:

  • This tax stays local and is invested in things that make our community better. Things that we can see every day. That’s a smart investment. It’s requires little thought to just hate taxes because they are taxes; it’s better to consider how that money will be spent and in what ways it will have a direct affect on your daily life.
  • The Cosmposhere and Strataca bring people here who leave their money behind. That adds wealth and value to our community. We need people from other places to spend money here, that’s how economies work. We’re not an island, and there’s only so much money we can churn around here ourselves.
  • If we don’t maintain roads, we replace them. And that’s more expensive down the road, when, after years of neglect, we all start complaining about all the potholes around town and demand that the city do something.

Now, here’s what I REALLY want these anti-tax groups to keep in mind.

The conservatives we put in office at the state level – you know those people who wanted to eliminate the income tax – twice raised the sales tax across the state. Including here in Hutchinson. And it was to offset the revenue reductions from the Brownback tax plan.

The first came in 2013, when legislators eliminated a planned sales tax reduction. Had the Brownback tax plan not drained the state’s resources, the state tax rate then would’ve been reduced from 6.15 percent to 5.7 percent. The second came in 2015, when the state raised its sales tax to 6.5 percent, again to offset the costs of the Brownback experiment.

There’s a good deal of reporting on this, and I’ve written extensively on it.

http://www.reuters.com/article/us-usa-kansas-budget/kansas-lawmakers-raise-state-sales-taxes-to-balance-budget-idUSKBN0OT02C20150613

http://www.hutchnews.com/32f21967-97a0-54e2-9e30-26671f16263d.html

http://www.hutchnews.com/9e425d6c-4d6b-5268-92c9-51065006848c.html

So, if the state sales tax was 5.7 percent as originally planned before Brownback & Co. got their hands all over everything, Hutchinson’s sales tax would be .80 percent lower – or 9.3 percent and 10.3 respectively. And that would include the 1/4 cent sales tax under consideration.

One other wrinkle to this whole sales tax thing is the use of special taxing districts. Personally, I don’t like them. I understand why we use them and need them, but I don’t like them. I view it as a form of redistribution of wealth, only the regressive sort. When we create a special taxing district, we gather small amounts of money from a bunch of people and then give it to a developer or company to use for a project. The counter argument to that is the money is used to spark investment and create jobs, and that’s a valid point. But I’m not arguing the merits or drawbacks of such districts. I simply want to point out that they, too, increase the sales tax.

We have two districts in Hutchinson that add to the sales tax – one a full percent and another a full two cents.

If the state sales tax rate was 5.7 percent, and we had no special taxing districts, the rate in Hutchinson would be 8.3 percent across the board – and that would include the 1/4 cent tax we’re all about to vote on.

If you want to have some angst about sales tax, make sure it’s put in the right place – and this tiny little tax that does a lot of local good isn’t the right place. The right place is at policymakers who followed the governor down a rabbit hole and somehow made raising the state’s sales tax – twice – seem like a tax cut. And, I suppose, to developers who want to use the community’s resources to hedge against a potential loss on their investments.

If you’re mad about this local sales tax, I think you have to ask why you’re not as equally upset about a tax increase at the state level that is more than triple its size.

 

 

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