As the Wichita City Council voted 6-1 to approve another community improvement district last week, this time creating a 2 percent higher sales-tax rate within the renovated Broadview Hotel, Mayor Carl Brewer said: “We must firm these things up and get some set, standard policy for this before these things get out of control.”
He could say that again — and apply it more broadly to the city’s liberal use of economic development tools.
As it is, special taxing districts are fast turning Wichita into a patchwork of areas in which sales tax is higher and any increased property taxes are diverted. The goal is to help pay for the development’s costs, and in some cases allow things to happen that wouldn’t otherwise. That makes the use of such districts especially tempting in areas where development is harder to come by, such as downtown or in low-income neighborhoods. Plus, there are good arguments for using the community improvement district designation where it’s likely that visitors will pay most of the extra tax.
But these tax tricks have consequences that the City Council seems to be taking too lightly, without regard to what they cost consumers or Sedgwick County and USD 259, and how the council’s decisions tie the hands of future councils.
In explaining why he considers the CID uniquely fair as a development tool, council member Paul Gray said last week that “anybody can use it. .æ.æ. We’re not picking winners and losers by saying this guy can use it and that guy can’t use it.”
But that view lets the council off the hook for how the public is taxed, turning tax policy over to private business. A council that has zero tolerance for higher property taxes should not be so quick to let individual businesses raise sales taxes.
And if the council insists on allowing disparate sales-tax rates throughout the community, it absolutely should disclose those rates to consumers at the point of purchase. City staff is considering whether to require stores to disclose the tax through a sign on the door or a line item on receipts, and whether a website should list every location in the city that tacks on a CID tax. Why not do all of the above?
The fact that signage reportedly “won’t work” is telling. If consumers balk upon seeing a sign disclosing that a business charges extra sales tax, the problem is the tax, not the sign.
On TIF districts, the Sedgwick County Commission fought back Wednesday, unanimously vetoing the city’s plan to create a district for a grocery store in Planeview.
It’s painful to see the line drawn at the Planeview project, which would be a great asset to the poor neighborhood. It’s also disappointing to see the city and council at odds over something else.
But the commissioners have a point about how TIF districts can have an adverse affect on the county.
The city should think twice, too — not just on Planeview but on how it deploys all its economic development incentives. With the downtown master plan forecasting the need for at least $100 million in public investment, the city must ensure its use of special taxing districts is strategic, fair, farsighted and defensible.
Because the Legislature has made the methods available to the city, developers will keep asking for them. But that doesn’t mean it’s in the best interest of the public for the City Council to keep saying “yes.”