What to do next when a half cent sales tax ends | Derby News

The benefits from the Derby Difference Sales Tax were outlined at a June 14 city budget workshop by City Manager Kiel Mangus. City officials and council members were presented information on what has been collected on the tax and what the funds have been used for.

In a special election in October of 2013 Derby voters approved a 10-year half cent retail sales tax, 1045 to 492 – a margin of more than two to one. In 2015 the city began collecting the tax which sunsets at the end of 2024.

Over the 10-year period, the Derby Difference tax projection totals are expected to exceed $ 35 million upon completion. The funds will have been distributed to include $ 17.5 million (50%) for parks, $ 10.5 million (30%) for fire and $ 7 million (20%) for the library.

Mangus says the city is trying to be conservative on their tax revenue estimates and that is one of the main reasons there will be excess money in the Derby Difference sales tax fund when it sunsets. He says they are projecting just under $ 900,000 for fire, $ 2.4 million for the library and $ 1.9 million for parks.

“We can use those funds on things like maintenance at Decarsky Park and to improve some of the parking issues there,” Mangus said.

At the June meeting Mangus pointed out that since the city started collecting the tax, approximately one-third of the revenues have come from purchases made in Derby by people living outside of Derby.

“The state of Kansas is able to calculate pull factor rates. It is looking at average sales by people in your municipality versus sales outside it. Derby is the sixteenth largest city of the first class, but ranks fifth in pull factor, ”he said.

The sales tax funds have allowed some significant enhancements to take place in Derby over the years.

Derby Fire and Rescue has increased staff from 17 to 26 firefighters, allowed for the purchase of a new fire truck, funded a training center and provided needed equipment. The parks funds constructed Madison Avenue Central Park, part of Decarsky Park and purchased lighting for Riley ball field. For the library the funds have paid for operations and staffing.

It was pointed out that not only does a sales tax bring revenue from people outside the community who make purchases in Derby, but it is based on consumption only. A sales tax can help reduce the risk of raising the mill levy.

Mangus pointed out that if the sales tax was not renewed, finding additional revenue sources would be necessary for things like firefighter salaries, maintaining and enhancing parks and, at some point, funding operations and staff at the library. He also suggested that cuts would be an option to consider.

With the discussion of renewing a sales tax to start in 2025, Mangus defined two options available for council members to consider.

A special purpose sales tax, like the Derby Difference tax, can be as much as 1 percent. Mangus explained a special purpose tax must be defined for specific fund uses – like parks, fire and the library. It must also expire in 10 years.

Another option is a general purpose sales tax. It can go up to 2 percent, provides more leeway in what the tax can be used for and is considered more general, requiring less specific usage details. The general tax can be longer durations of time, including being permanent. The council can decide to repeal it over time.

A community survey is expected to be launched by the end of 2022. Mangus said they want to access community priorities and preferences as well as a willingness to pay for the tax.

He suggested the council pass a resolution defining the ballot question by early 2023 with the second half of 2023 as a possible ballot question vote. He indicated that if it failed in 2023 it would give them time to come back in 2024 with a retooled question.

The budget workshop was only an opportunity to discuss the various options and ideas. But discussion by council members was leaning more toward renewing some kind of sales tax. The city council would need to secure any actions through a vote during regular council meetings.

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