Wichita wants more from countywide sales tax

Wichitans are projected to pay about 75 percent of the countywide 1-cent-on-the-dollar sales tax in 2016.

But the city is projected to get only 58 percent of the revenue from the tax.

City officials want to change that.

The difference is about $17.8 million a year, part of which Mayor Jeff Longwell says could be used to improve arterial streets in Wichita and create a regional transit authority without raising taxes.

Longwell and City Council member Pete Meitzner propose shifting some of the countywide sales tax money to Wichita from unincorporated areas, which are projected to get about $13 million more than they pay in taxes next year.

Wichitans make up about 76 percent of the Sedgwick County population.

“(The numbers are) glaringly visible that show that inequity in that particular tax collected from our community,” Longwell said. “It’s really a black-and-white issue. You can look at the numbers.”

The tax, approved countywide by voters in 1985, generates about $102 million each year from cities and unincorporated areas combined. Voters were told half the money would be used to reduce property taxes and the other half to fund road or transportation projects.

About half of Wichita’s current allocation of the sales tax goes to offset property taxes. Traditionally, the other half has gone toward improvements on Kellogg, but recently a portion was also used to pay for the 13th Street flyover on the west side.

‘Close that gap’

The state has a formula that determines how sales tax revenue is distributed. But Meitzner said the county could choose to redistribute it internally.

“We’re going to ask the county to close that gap,” Meitzner said.

The real disparity, Longwell said, is what unincorporated areas are getting. Those areas make up about 7.5 percent of the population. They pay about 15.8 percent of the county sales tax but receive 28.6 percent in return.

“We’re not trying to pad our budget,” Longwell said. “We’re fixing things that are going to be important to their tax base that they collect the tax from.”

Longwell and Meitzner met with Sedgwick County commissioners Richard Ranzau and Karl Peterjohn about the issue in August.

Ranzau said Tuesday he’s still evaluating the proposal. Peterjohn said it could shift costs back on the county. He said the state’s formula for redistribution is meant to be uniform.

“That would violate that uniform statute, and complications would be significant and there might be some unintended consequences,” Peterjohn said.

The change would take away or draw down “a stable source of revenue” from the county and other cities, Sedgwick County said in a statement Tuesday.

“Sedgwick County would expect that if the Wichita City Council wants to pursue changing the state law, they will have a fully developed plan and public discussion before proposing this change,” the statement said.

The statement also pointed out that “the City of Wichita has the ability to impose their own local option sales and use tax, which doesn’t require that they share their tax with any other unit of government.”

Meitzner said the effect of the state formula is exacerbated for Wichita because of its size and because it does not have a city sales tax to offset the impact of the disparity. Some medium-sized cities in Kansas have their own sales tax.

The city sought a 1-cent city sales tax last year that would have collected about $400 million over five years to fund water, streets, transit and a jobs fund. Voters soundly rejected that tax proposal in November.

Smaller cities

Most smaller cities in Sedgwick County also are projected to get more back from the tax than they put in, with the exception of Derby and Cheney, according to city estimates.

On Tuesday, Longwell presented to area mayors the idea of redistributing part of the tax money. He emphasized that Wichita is not interested in changing the extra sales tax money smaller cities are projected to receive, about $4.7 million in 2016.

“It’s certainly interesting and I was not aware,” said Goddard Mayor Marcey Gregory. “Definitely a formula that’s been in place for 30 years maybe needs to have some adjustment.”

Maize Mayor Clair Donnelly said he wanted some time to digest the figures and discuss it with his staff but that he thinks his city would support it.

Several of the smaller cities in Sedgwick County could see a benefit from changing the formula because they could have connector services with transit if Wichita is able to create a regional transit authority, Longwell said.

“In a roundabout way, they get some of that money coming back to them indirectly because they get services, but we want to make sure they’re held harmless in the way that we alter the formula that’s in play today,” he said.

“We don’t want to create any issue with the cities, and many of those cities will have obligations in place today that they still need to honor that that revenue stream is committed to.”

‘Not the first’

If the county does not change the distribution of the countywide sales tax on its own, Longwell said, he’s interested in pursuing a change in state law.

Three counties have exemptions to the current state formula for distributing sales taxes: Johnson, Montgomery and Phillips.

“We’re certainly not the first,” Longwell said. “The county could make adjustments on their own on that distribution, but to build it into state law, it’s something the Legislature would have to approve.”

Meitzner said he has crafted draft language for a bill to create an exemption for Wichita should the city need to push for legislative approval.

This story was originally published September 8, 2015 at 7:06 PM with the headline "Wichita wants more from countywide sales tax."