City Council OKs four projects for proposed 1-cent sales tax
08/05/2014 1:29 PM
08/06/2014 1:05 PM
The Wichita City Council took a step closer to putting a 1-cent sales tax on the November ballot in a bid to generate nearly $400 million over the next five years.
After lengthy discussion during a special meeting, the council voted 7-0 to establish the city sales tax for five years to fund four areas: a new water source, jobs development, the city bus system and street repair and maintenance.
In that vote, 63 percent of the tax revenue would go to water, 20 percent to jobs development, 10 percent to transit and 7 percent to streets.
Based on projected estimates of collected sales tax, that would mean $250 million for water, $80 million for jobs, $40 million for transit and $28 million for streets.
“We’re off the dime and know what direction we’re heading,” Mayor Carl Brewer said after the 5 1/2-hour meeting. “It’s not set in stone yet, but we’re certainly putting things in place.”
For about 18 months, the council has been debating and receiving public input on priorities for community projects. The four projects approved Tuesday had made the final cut.
The public will now get a chance to provide more input during the next two months through multiple community meetings, including six at-large sessions sponsored by district advisory boards, City Manager Robert Layton said.
At a special meeting on July 29, the council will consider whether to tweak the proposal.
The council is scheduled to vote on the matter Aug. 5. The deadline for a question to be placed on the November ballot is Aug. 18, Sedgwick County Election Commissioner Tabitha Lehman said.
Council members weren’t ready to speculate about how the public would react to the proposal.
“My mind is completely open on that,” Janet Miller said. “We’ll listen the best we can.
“If they want us to change something, I would hope they would share with us why and how they would make changes in a constructive way.”
James Clendenin said, “Our motion today will give people a sample ballot. I think the debate is going to come down to funding transit and/or the streets.”
All the council members showed support for funding a new water source and jobs development but were split over streets and transit.
The city already gets 58 percent of the revenue from a 1 percent Sedgwick County sales tax, city budget director Mark Manning said.
That translates to about $54 million annually, or $1 billion since the county tax was established in 1985. By law, that money must be used to reduce property taxes and for roads, bridges and freeways, Manning said.
Wichita and Newton are the only communities in the area that don’t have a city sales tax. Newton is in Harvey County, which has a 2 percent sales tax. The current state and county sales tax in Wichita adds up to 7.15 percent.
With memories of the recent two-year drought, no one was objecting to spending money on a new water source.
Council members have said the most attractive option is to spend $250 million to build a 50-acre reservoir north of Wichita to capture and use more water from the Little Arkansas River.
That money also would be used for improvements to the aquifer system, drilling additional water wells, increasing piping and building a second transmission pipeline to the city’s treatment plant.
Another $125 million would be needed for operating costs through 2060, but that would be paid through water bills.
With the sales tax, water rates would increase 1.3 percent. Without the sales tax, rates would go up 6.2 percent, according to information provided by the city.
Another option is obtaining water from El Dorado Reservoir. Wichita would have to buy the water from the city of El Dorado, which owns the water rights to the reservoir.
Details are still being negotiated, Layton said.
With the sales tax, the costs for the El Dorado option range from $633 million to $1.36 billion through 2060 and projected rate increases of 4 percent to 11.6 percent. Without the sales tax, water bills are projected to jump between 15.8 percent and 41.5 percent.
The $250 million for the El Dorado plan would include spending $16 million to improve Wichita’s water intake system.
The rest would be used to build a larger treatment plant for El Dorado and to prepay for water, said Alan King, director of Wichita’s public works and utilities.
Some council members expressed concern about spending money to improve El Dorado’s facilities.
Regardless of what is done, water conservation will continue, King said.
Nearly two hours were spent discussing job development, including public input.
More than 30,000 jobs have been lost from the area since 2008, according to information presented to council members. Sedgwick County’s job growth from 2000 to 2010 was 1 percent – far below the 15 percent of the 1990s, 13 percent in the 1980s and 39 percent in the 1970s.
“We’re getting our clocked cleaned by those in the region and outside the state,” Clendenin said.
Council member Jeff Longwell said that’s frustrating because the city has the lowest sales tax in the area and lowest property taxes and water rates for comparable cities.
Of the jobs fund portion of the sales tax revenue, 40 percent would go to establishing infrastructure, 40 percent for workforce training and 20 percent to expansion and relocation costs.
“We’ll only spend what we have to spend,” Gary Schmitt, chairman of the Greater Wichita Economic Development Coalition, told the council. “But we have to have those funds available.”
Administration of the plan would come from a commission that would include three business leaders and two City Council members. The council also would appoint an oversight committee.
“It’s not a slush fund,” Longwell said.
Details of how the funds would be applied would be on a case-by-case basis.
“Every company coming to our community is going to have a specific need,” Schmitt said. “We can’t pick winners and losers. Companies we work with are already the winners.
“What we do determines whether we are winners or losers.”
For the city-owned bus system to avoid a $4.4 million deficit in 2016, services would need to be reduced by 24 percent, said Transit Director Steve Spade.
To avoid another $4.4 million deficit in 2017, a 50 percent service reduction would be required, he said.
The system is in a “death spiral,” said Miller, who led the charge to support the buses.
Cutting services also would mean losing federal money, Miller reminded the council.
“We’re trying to stabilize the system, add a few extra routes,” Miller said, “and keep it from evolving into no system at all.”
Much of Tuesday’s debate centered on the quality of life and obligation the city has to those who depend on the buses to get to work, to shop and to get to medical appointments.
Having a dedicated funding source – such as the sales tax – would allow transit to provide service over a longer period and to establish continuity, Spade said.
That in turn would build up confidence in the public and increase riders, he added.
The transit serves just under 2 million fares annually in Wichita, Spade said. It would take 15 million for transit to break even, he added.
Spade, however, also told the council that there isn’t a transit system in the nation that breaks even or makes a profit.
Even with the sales tax, the transit system would face a deficit again by 2022 if no other funding source were to be found, Spade said.
Council member Jeff Blubaugh called the sales tax a “Band-Aid” approach for transit.
Miller said that if the service provided impresses the public enough, voters may decide to renew the sales tax at the end of five years.
Council members were divided on using the proposed sales tax revenue for streets because other funding sources – such as the capital improvement budget – are available.
Layton acknowledged that anything done with the sales tax revenue for streets would be “supplemental.”
Council members also noted that they hear more about street woes from the public than anything else.
“So many people tell me they’ve lived on the same street for 30 years,” Blubaugh said, “and nothing has been done to them.”
Miller, however, noted that a person can call a hotline about a pothole and have it filled within 24 hours.
With sales tax funding, the city would be able to start rehabilitating the oldest streets earlier, King said.
“This would be a shot in the arm to rebuild those streets,” he added.