Resolution Places Sales Tax Question on Ballot


                The Board of County Commissioners of Edwards County passed a resolution at their Monday, February 14 meeting that will ask voters to increase the countywide sales tax by 3/8th of a cent or .375% in order to fund Economic Development in Edwards County.

                Economic Development is an essential service in communities that exists to stimulate economic growth and development resulting in increased revenues for city and county governments.

                Without economic development our communities would surely plummet quickly into extinction.  This agency also acts as a watchdog for critical issues that affect our communities and citizens and facilitates planning for the future. 

Economic Development in Edwards County promotes our communities for tourism and growth and spearheads project that improves the quality of life for our residents.

No matter how important one feels economic development is, the question that remains is how should it be funded?  Currently the agency is primarily funded through allocations from County and City governments in Edwards County.

 For 2011 the agency will receive $40,000 from the County, $4,800 from the City of Kinsley and $500 from the City of Belpre.  The total of $45,300 is just a few thousand more than the $41,000 the agency received 10 years ago in 2001.

The majority of these allocations go to fund the salary and benefits of the Director which is the only employee of Economic Development.  In 2008, the Economic Development Board of Directors negotiated an agreement with Edwards County that would make the Director an employee of the County.  This was done in order to be able to offer a competitive benefit package in order to attract qualified applicants for the job.

However, since the cost of county benefits and salary exceeds the allocation given by the County, the agency must fundraise in order to pay back the county for the excess costs of this employee.

The 2011 budget for Economic Development is as follows:  Salary - $36,040, County Benefits - $25,000, Rent/Utilities - $3,160, Travel - $3,300, and Supplies/Miscellaneous - $4,553.  The total budget for 2011 is $72,053.

The current funding level is not adequate to meet operational expenses while accommodating growth of the program.  Since the board and staff of economic development must raise the additional funds to meet expenses, the direction of the program is being dictated by possibilities for funding rather than the needs of the county and a significant amount of time is being spent on planning and implementation of these fundraising activities rather than on community planning.

An additional stable funding source is needed that is adequate to meet current and future needs of the program.  Without significant changes to the program there will not be enough funding to sustain our Economic Development program past October of this year.

After much consideration, the Economic Development Board decided the only solution to this problem was to completely change the method of funding the program from government allocations to sales tax.

Funding through sales tax is a more fair tax as it will spread the burden of funding the program to all residents of the county as well as visitors to the county who make purchases here.  With the current method of funding the burden is primarily placed on property owners and business owners.

Funding through sales tax will provide adequate funding with room for growth whereas the current allocation leaves the program with a $30,000 budget shortfall.

A sales tax funding system for Economic Development will provide an incentive for the program to work harder for the citizenry.  The more success the program has in bringing in new business and visitors, the more funding they will receive.  With the current funding system, it doesn’t matter what success is made, the program receives the same or similar allocation.

A sales tax funding system will make the agency more accountable as well.  When the economy dips and our citizens must cut back, the agency will also have to do the same due to lower sales tax revenues.

Finally, switching from an allocation basis of funding to a sales tax funding system will reduce spending of the County and Cities by over $45,000 and allow the governments to apply this funding to other crucial areas or lower their budgetary requirements.

The question on the April 5 election ballot will ask the citizens to raise the current sales tax by 3/8th of a cent or .375%.  This would raise approximately $87,000 based on figures for 2009 revenues.  This amount would also accommodate the 2011 budget of $72,053 with room for growth and the possibility of establishing a fund to provide business incentives.

The sales tax increase will be virtually unnoticeable to local shoppers at less than half a cent per $1.00 or just $.38 per $100 spent.  This will not adversely affect any county businesses as there are no big ticket items like automobiles sold in the county.  Even the purchase of a $1000 refrigerator would only cost the shopper an additional $3.75 in sales tax.

This increase will not affect manufacturing or farmers as they are not required to pay sales tax on items used to produce their end product.

If the sales tax increase passes in April the new rate in Kinsley would be 8.675% and in the rest of Edwards County it would be 7.675%.  This rate will still remain comparable to the rates that we pay in surrounding cities where many of us go to shop regularly.  The rate in Dodge City is currently 8.9%, Larned – 8.8%, Great Bend – 8.05%, Hays – 8.55% to 10.55% (depending on where you shop), and Wichita – 7.3%.

Other communities have made an investment by increasing sales tax to provide improvements to their communities and amenities for their citizens.  And every time you shop in their community you are helping them pay for those improvements.

Economic Development is asking the citizens of Edwards County to make that same investment and allow those who visit here to help us improve our communities.

The process for passing the sales tax question began many months ago.  The current Kansas Statute regarding sales taxation only allows counties to impose up to 1%.  However, they do allow counties to go over 1% by gaining special legislative permission.   In fact, numerous Counties and Cities have gotten special permission to raise their sales tax over the statutory limit in the past.

Senator Ruth Teichman sponsored a bill to gain that legislative permission, Senate Bill 10.  The bill quickly went to the Senate Assessment and Taxation Committee back in January and was recommended for passage to the Senate shortly after.  However, Teichman heard grumblings in the House that the bill could be taken hostage and allowed to die in committee or have something added to it due to a House Bill that has been introduced allowing for the reversal of the decision to impose a Statewide 1% sales tax last year.

However, the bill finally did pass the Senate on Thursday, February 24 and has now been sent to the House Taxation Committee.  The bill is expected to be passed before the April 5 election, however, since legislative permission was not gained before the ballots had to go to press, the question will state that the new tax will take effect pending legislative approval and fulfillment of statutory requirements.

If the sales tax question passes at the April 5 election, the tax will likely begin collection on July 1, 2011.

For more information about this issue or to request a presentation concerning the sales tax proposal, contact Linette Miller at Edwards County Economic Development at 620-659-2711, ecedc@sbcglobal.net or visit www.edwardscounty.org.

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