Kansas counties need state permission to raise sales taxes. Here's why that could change.
Kansas may make it easier for local governments to raise sales taxes.
State lawmakers on a Special Tax Committee have recommended that the Legislature remove a required step for counties to get legislative permission before asking voters for a tax increase.
"This was something that I've been looking at, actually since I was a county commissioner, realizing that the process is extremely cumbersome," said Rep. Adam Smith, R-Weskan and the committee chair.
The committee was tasked with studying various tax issues, among which was simplifying the process for counties in particular to obtain sales tax authority.
"Just judging from the general temperature of the committee, I think that's something that will move forward fairly quickly," Smith said. "If it's the House that gets that, we will hopefully get that sent over to the Senate fairly quickly."
Under Kansas law, a city sales tax is capped at 2% for general purposes, such as street maintenance or public safety, plus another 1% for special purposes, such as building projects. Countywide sales taxes are typically capped at 1% with revenue apportioned according to a statutory formula.
"The citywide and countywide sales taxes have been an important piece of the funding puzzle since the Legislature authorized them in the 1970s," said John Goodyear, general counsel for the League of Kansas Municipalities.
Cities don't need state permission, but counties do, before asking voters to approve a sales tax increase.
Counties need permission from Legislature to raise sales taxes
Jay Hall, deputy director and general counsel for the Kansas Association of Counties, emphasized that he was there to provide requested information, not to lobby for legislative action.
"We are not at this time pursuing legislation to change the sales tax authorizations," he said. "The request that we received was simply to give our feedback on this process."
Hall said the current process is inefficient and can cause a lengthy delay between when a county commission decides to pursue a sales tax increase and when the tax starts to be collected.
That's because a county first must get permission from the Legislature before the question can go before voters in an election, at which point a voter-approved sales tax increase needs at least a full calendar quarter for the Kansas Department of Revenue to notify businesses of its implementation.
"We would have a two year lead time in order to collect that tax under current law," Hall said. "Obviously, counties currently operate under this and plan ahead for those types of things. But that is something that is a challenge for counties."
State politics can delay local projects
Because the counties need legislative approval, and bundling of tax provisions into a controversial package could risk all of them failing to pass — as has happened before.
"Because these are individual county requests, a lot of times they get bundled in larger packages," Hall said. "A request hasn't necessarily been rejected on its own but as part of the larger package, occasionally those requests have fallen with the rest of the package."
"I'm familiar with that," Smith said. "When I was a brand new legislator, I had a sales tax authority for Thomas County that got bundled up and was effectively lost and delayed a (jail) project up in northwest Kansas for a year because of that."
Legislators see local sales taxes as a local issue
Hall said the easiest way to streamline the process would be to eliminate the requirement that counties seek approval from lawmakers for the taxing authority.
"I've had conversations with legislators, particularly new legislators that are not familiar with this process, and they say, 'I don't understand why I'm voting on the sales tax for XYZ County, I don't know anything about XYZ County, why am I voting to approve their sales tax?'" Hall said. "I have to remind them you're not actually voting to approve the sales tax, you're voting to approve the ballot question so that the residents of that county can actually vote on that sales tax question."
Rep. Barb Wasinger, R-Hays and a former county commissioner, called the process "very convoluted."
"I think it would be easier to streamline it for them because either way they have to go to their voters," she said. "If their voters don't like it, they're not going to get it. It needs to go to the people, not necessarily jumped to us. ... So I think it just makes sense to eliminate some of the extra work."
"These are local issues," said Rep. Mike Amyx, D-Lawrence. "These need to be handled back home. ... If they're selling the wrong things, we're going to be told at the polls."
Could the state allow for even higher sales tax increases?
Goodyear said the league would likely support increasing the current caps.
"This isn't something that's gone before our member cities so I can't speak for speak for them completely," he said. "I think that they would likely support increasing the statutory caps on sales tax levy, or more streamlined process for the approval of a countywide dedicated tax. That said, if you did it for cities, I'm not sure how many would use it. There's not very many cities that are levying up to the 3% that they're authorized to levy."
Only four cities are currently at that 3% cap, he said.
City leaders must consider what voters will tolerate, Goodyear said, while not changing merchant and consumer behavior to conduct their commerce outside city limits.
Smith asked Goodyear whether the current statutory limits are sufficient.
"I'll always advocate for increased local control," Goodyear said. "So if you want to give us more sales tax authority, we would likely support it as a measure of increased local control. That said, I'm not sure how many would try to use it."
Jason Alatidd is a statehouse reporter for the Topeka Capital-Journal. He can be reached by email at jalatidd@gannett.com. Follow him on X @Jason_Alatidd.
This article originally appeared on Topeka Capital-Journal: Kansas lawmakers may make it easier for counties to raise sales taxes
