Wichitans will vote on whether to start a city sales tax next week.
The tax would be 1 cent on every dollar spent, or 1 percent of purchases on most things people buy. It would collect nearly $400 million over five years and end earlier if the amount is collected sooner.
The sales tax would go toward four areas: $250 million to expand an existing water supply, $80 million for job development, $39.8 million for transit and $27.8 million for street maintenance and repair.
The Eagle has gathered common questions about the proposal that will be on the Nov. 4 ballot. Answers are based on previous reporting, interviews and city documents about the sales tax.
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Q. Has the city of Wichita ever had a sales tax?
A. City finance director Shawn Henning said Wichita has never had a citywide sales tax. Currently, Wichita residents pay a 6.15 percent state sales tax and a 1 percent county sales tax. The city sales tax, if passed, would raise the total sales tax for Wichitans to 8.15 percent.
Q. What guarantee do citizens have that the city will not continue the sales tax beyond $400 million or five years, whichever comes first?
A. The city is legally obligated to “sunset” or end the tax once the $400 million is collected, based on the ballot language, City Manager Robert Layton said. The language also legally binds the city to use the money only for the particular projects that are listed.
Q. What will the ballot say on Nov. 4?
A. “Proposition No. 1 – City-wide retailers’ sales tax
“Shall the following be adopted?
“Shall the City of Wichita, Kansas, be authorized, pursuant to K.S.A. 12-187 et seq., to impose a one percent (1.0%) city-wide retailers’ sales tax to be effective April 1, 2015, and which will terminate no later than April 1, 2020, with an amount not to exceed $250 million dollars of such tax applied to pay the costs for the purchase, development, maintenance and operation of a long-term water supply, with an amount not to exceed $80 million dollars of such tax applied for job development and creation, with an amount not to exceed $39.8 million dollars of such tax applied to support Wichita Transit operations, and with an amount not to exceed $27.8 million dollars of such tax applied for street maintenance and repairs?”
Q. Aren’t we still being taxed on the downtown arena?
A. No. The 30-month, 1-cent sales tax to build the Intrust Bank Arena ended on schedule on Dec. 31, 2007.
The countywide sales tax raised $206.5 million, which was $15.2 million more than was needed to complete construction, Sedgwick County Assistant Manager Ron Holt said. The $15.2 million was placed in a maintenance reserve fund and used for parking and operations, he added.
Q. Why can’t we vote on the four issues separately?
A. The City Council voted to bundle all four issues into one question for the ballot.
Q. What will happen with those four issues if the tax isn’t passed?
A. ▪ Water: Water rates will go up more than if the sales tax does pass and will do so indefinitely.
▪ Jobs: Wichita would have fewer resources in its attempt to restore 20,000 jobs that were lost during the recession. City officials say it would remain difficult to compete with other cities.
▪ Transit: City officials say the transit service will be reduced by 25 percent. In order to stabilize transit, the city estimates it would require an overall property tax increase of $8 million annually.
▪ Streets: The city estimates it would require an additional $5.5 million annually in property taxes to repair the streets, saying the longer repairs are delayed, the more expensive it will be to fix and maintain the streets.
Q. Does the city have a plan for where sales tax dollars would go?
A. Yes. The Eagle has been reporting on the different aspects of the plan for months. The city has a website with details at www.wichita.gov/salestax.
Effect on consumers
Q. If the tax is not passed, will property taxes be increased?
It’s possible, although there has not been a formal proposal by City Council members to do that. Layton said that if the $400 million were to be funded through property taxes, it would require a 9.4 mill increase in the mill levy.
Q. What would the sales tax effect be on a family of four?
A. The Eagle looked at adjusted IRS data and estimated that a family of four with an income between $40,000 and $50,000 would see an estimated increase in sales tax of $161, bringing the total estimated amount spent on sales tax each year to $1,315. The extra amount people will spend will also vary based on large purchases and spending patterns.
Q. Are there exemptions to the sales tax?
A. Food-stamp purchases; Women, Infants and Children program purchases; prescription drugs and insulin; orthopedic appliances; prosthetic devices and mobility equipment; some aircraft sales and parts; and farm machinery and equipment, among other things, are exempt. A full list of exemptions can be found on the Kansas Department of Revenue website.
However, food is subject to the tax in Kansas under state statute.
Q. Why doesn’t the City Council exempt food from the sales tax?
A. The council does not have the legal authority to exempt food. The exemptions are decided by state statute and would have to be changed by the state Legislature.
Q. Can I claim sales tax as an itemized deduction on federal tax reforms?
A. Not any more. That provision recently expired.
Q. What will the jobs fund go toward?
A. The city’s goal is to create 20,000 jobs in the next five to seven years.
Forty percent, or about $32 million, would go toward infrastructure for things like Wichita State University’s new innovation campus or other road and sewer projects.
Another 40 percent would go toward workforce training, including retraining for production workers and grants to local colleges and training institutions.
The last 20 percent, or about $16 million, would be used to offset business costs for moving or expanding locally or investing in things like Wichita State’s National Institute for Aviation Research.
Q. Who will decide where the money goes?
A. If the tax passes, a jobs commission made up of three private-sector leaders and two public-sector leaders would be responsible for evaluating projects. It would use the results of three economic analysis models run by the Center for Economic Development and Business Research at Wichita State to aid in its decisions.
Anyone could be nominated for the commission; appointments will be made by the City Council.
Q. Can the City Council override individual decisions made by the jobs commission?
A. Layton says it cannot.
Q. Who will oversee the jobs commission?
A. A citizen’s oversight committee made up of 12 to 15 council-appointed members will oversee everything – the jobs commission, the water plan, the transit plan and pavement maintenance plan. It also will review all expenditures. The jobs commission also will be subject to a yearly audit by an outside CPA firm.
Q. Why do we need a water plan? Isn’t the drought over?
A. Yes, the drought is over in the Wichita area. However, the city plan would provide for future drought protection if the area were to face another severe one and for future water needs.
Sales tax money would expand an existing water source, the city’s Aquifer Storage and Recovery facility northwest of Wichita. The ASR pulls water out of the Little Arkansas River and stores it in the Equus Beds, a sprawling underground aquifer where the city has wells.
Expansion would potentially double the amount of water the city could pull out of the river and store to 60 million gallons a day, city official say. Officials say that would meet the growing demand for water through 2060.
The expansion also would address preparedness for a severe drought. State regulations require water providers, such as Wichita, to be able to provide water in case of a drought that happens once every 50 years – also known as 2 percent drought.
Current water supply would allow the city to withstand a 2 percent drought with growing demand through 2023, city officials said.
Last year, the City Council voted to prepare Wichita in case it’s hit with a 1 percent drought – one that happens every 100 years, such as what happened during the 1930s Dust Bowl.
An expanded ASR would allow the city to have enough water to meet increasing growth demands and handle a 1 percent drought through 2060, city officials say.
Q. If the amount for the ASR is less than $250 million, will the tax end early?
A. The tax would end early if the bids show the ASR can be expanded for $200 million and the amount raised will still cover the fixed allotments for streets, jobs and transit.
Q. How much will water rates go up?
A. Water rates are projected to increase nearly 20 percent over the next four years regardless of whether voters approve the tax, according to figures provided by city officials. An average monthly bill for residential water use would increase from $22.40 to $26.83, regardless of the election outcome on the tax.
If the tax isn’t approved and the City Council opts to expand the ASR through financing, water rates would increase an additional 32 percent over the next four years.
That would mean a total increase of 52 percent by 2018. The average monthly residential water bill would be $34.
Q. Why don’t we pay for the ASR through financing instead of a sales tax?
A. Cost through the sales tax would be $250 million, unless the bids are lower. In the longer term, financing through the sale of bonds would cost $471 million, according to city officials.
Streets and transit
Q. Which streets will be part of the street maintenance projects?
A. The money would pay to reconstruct 111 miles of some of the city’s worst neighborhood streets. The number of miles has been determined by city officials based on the amount of funding available and the cost per mile. The streets will be prioritized by need if the measure passes.
Q. Are unpaved streets included in the plan?
Q. What would the tax fund for transit?
A. City officials hope to add and expand routes in 2015 and 2016, increase peak-hour service in 2016 and add evening routes until 11 p.m. starting in 2017.
Q. What routes would be added or expanded?
A. With sales tax money, the city would:
▪ Extend the East 17th Street route from Wichita State University to North Rock Road and Bradley Fair.
▪ Add a crosstown route from 31st Street South to 29th Street North along Hillside.
▪ Add a route connecting Douglas from West Street east to Woodlawn or Towne East Square.
▪ Add a crosstown route along 21st Street connecting North Rock Road and NewMarket Square.
▪ Connect the West Maple and East 17th Street routes.
▪ Connect the East and West Central routes.
Q. Would the city buy new buses?
A. Yes. Expanded routes would mean a growing fleet of buses. Currently, about 35 buses run during peak hours. The plan would allow up to 52 buses to run during peak hours by 2017.
The city also wants to improve peak-hour service so buses run more often than once every 30 minutes.
Q. How many people ride the bus?
A. About 2.25 million rides were taken on the transit system in 2012, compared with about 2.15 million in 2013. So far, this year has followed the same trend. City officials say the number of riders has decreased because of the city’s decision several years ago to cut service on the west side and to raise fares.
The majority of people use the bus to get to work, school or go shopping. Many bus riders do not have alternative means to travel around Wichita.