Leavenworth city commissioners agreed Tuesday to move forward with a sales tax referendum. Commissioners are proposing the sales tax increase for the purpose of reducing property taxes.
No official vote was taken Tuesday during what was a study session. But commissioners reached an agreement regarding placing a proposed a 1 percent, or 1-cent, sales tax increase on a ballot for a special election.
City Manager Scott Miller said a resolution regarding the referendum will be brought back to the Commission for a vote, possibly as early as next week.
The proposed sales tax increase likely will be placed on the ballot for an April 8 special election. If passed, the sales tax increase probably would go into effect Oct. 1, 2014.
"I think this will pass," Mayor Laura Janas Gasbarre said. "I think the community understands the importance of it."
The idea of increasing the sales tax in the city in order to reduce property taxes was raised earlier this summer as commissioners worked on the 2014 budget.
Miller previously presented information to commissioners indicating that Leavenworth has the second highest property tax rate among first-class cities in Kansas. He averaged the sales tax rates for the cities in Leavenworth, Wyandotte and Johnson counties as well as the city of Atchison. The average is 8.598 percent. The city of Leavenworth's sales tax rate is 8.15 percent.
During Tuesday's meeting, City Clerk Karen Logan reviewed several options with commissioners. She recommended seeking a general purpose sales tax instead of a special purpose sales tax. She said special purpose sales taxes sunset after 10 years.
Even with a general purpose sales tax, the city still has to state the reason for the proposed increase on the ballot. In this case, the purpose will be reducing the city's property tax rate.
She said there are four times a year the sales tax rate can be increased ― Jan. 1, April 1, July 1 and Oct. 1.
She suggested seeking to have the sales tax increase go into effect Oct. 1, 2014, in order to impact the 2015 budget. She said the city wouldn't receive the revenue from the increased sales tax rate until the end of December.
"It's practically the first of December," she said.
Logan said having the sales tax referendum decided in an April special election would allow time for the increase to be in place by Oct. 1, if it's approved by voters.
There was some discussion in the past of possibly putting a portion of the increased sale tax revenue into the city's general operating budget instead of using all of it for reducing property taxes. But when they met Tuesday, commissioners supported using 100 percent of the revenue for property tax reduction.
Mayor Pro-Tem Mark Preisinger said this would reduce the city's mill levy for property taxes to about 33 mills. The mill levy is currently 51.841 mills.
Page 2 of 2 - He said this would put Leavenworth on par with quite a few neighboring cities.
"I think 1 percent is not going to affect a buying decision," he said.
But he said high property taxes will affect home buying or business location decisions.
Preisinger said he believes voters wouldn't support using a portion of the sales tax revenue for something other than property tax reduction.
Commissioner Lisa Weakley said an option that would propose using a quarter of the increased sales tax revenue for the general operating budget is too ambiguous.
Commissioner Davis Moulden said he supports the sales tax proposal.
"I hate that property tax," he said.
Dedeke also expressed support for the sales tax proposal. He said the only thing that bothers him is the possibility future city commissioners can decide to raise the mill levy again. Then residents would be stuck with high property taxes and a higher sales tax.
"The voters need to concentrate on who they're going to elect," he said.