What’s the plan if the earn­ings tax goes poof?

In­stead of co­or­di­nat­ing a pos­si­ble re­sponse with coun­cil mem­bers, Mayor Funkhouser is work­ing be­hind the scenes

The Kansas City Star (Sunday) - - OPINION -

IThe first would out­line his no­tion of “the ideal tax struc­ture” for the city, which might or might not in­clude an earn­ings tax. The sec­ond would in­clude the mayor’s pro­posed tax struc­ture if vot­ers in 2011 re­peal the earn­ings tax over a 10-year pe­riod.

“We need to take the of­fense,” the mayor said, in telling peo­ple what’s at stake.

We agree, al­though there are trou­bling as­pects to the mayor’s ap­proach.

With his work oc­cur­ring be­hind the scenes, it’s dif­fi­cult for Kansas Ci­tians to know who’s got the mayor’s ear, who’s push­ing him one way or an­other on what the “ideal” tax struc­ture might be.

Also, it doesn’t ap­pear he’s work­ing with many coun­cil mem­bers. They would be re­spon­si­ble for putting any ma­jor bud­get changes be­fore vot­ers or sup­port­ing those changes in Jef­fer­son City.

Given what’s at stake, we con­tinue to call for an in-depth anal­y­sis of the fu­ture of the earn­ings tax in Kansas City. Among the sober­ing is­sues:

If the earn­ings tax goes away, that ul­ti­mately would blow a $10 mil­lion-plus an­nual hole in the city’s tax in­cre­ment fi­nanc­ing projects. TIF dis­tricts now col­lect that much money — plus sales, prop­erty and util­ity taxes — to pay for im­prove­ments within their de­vel­op­ments.

City tax­pay­ers are on the hook for hun­dreds of mil­lions of dol­lars in debt partly backed by the earn­ings tax. If earn­ings tax re­ceipts van­ish from the Power & Light District, for ex­am­ple, tax­pay­ers will have to in­crease the pub­lic sub­sidy for Power & Light debt.

Re­peal of the tax might im­peril the city’s abil­ity to is­sue bonds for longer than five years. As a re­sult, in­ter­est rates — and tax­payer costs — for bonds could go way up.

How could the city save even more money in its al­ready tight bud­get?

Mayor Fran­cis Slay of St. Louis pro­vides one route Funkhouser and the coun­cil ought to fol­low: Con­vince the Gen­eral As­sem­bly to give Kansas City and St. Louis con­trol of their po­lice de­part­ments. As Slay wrote last month: “Merg-

n re­cent weeks, an army of pe­ti­tion­ers has staked out po­si­tions at the Coun­try Club Plaza, Zona Rosa, In­de­pen­dence Cen­ter and else­where across Mis­souri.

Their goal: Col­lect enough sig­na­tures to force a statewide vote this fall that, if ap­proved, would force a Kansas City vote in 2011 to kill or re­tain the 1 per­cent earn­ings tax.

The leader of this ef­fort is Rex Sin­que­field, an anti-earn­ings-tax zealot who has com­mit­ted to spend at least $1 mil­lion to sup­port his cause. Un­for­tu­nately, some pe­ti­tion­ers are us­ing mis­lead­ing tac­tics to ob­tain sig­na­tures.

Mean­while, the mayor of Kansas City has a “What, me worry?” ex­pres­sion on his face, at least in pub­lic. Mark Funkhouser has seemed al­most cav­a­lier about a pos­si­ble cut of $200 mil­lion in the city bud­get — a huge threat to fund­ing pub­lic safety, cap­i­tal main­te­nance pro­grams and many city ser­vices.

“I think we ought to look care­fully, thought­fully and in­tel­li­gently at this,” he said back in Jan­uary.

That’s not hap­pen­ing, at least where peo­ple can see. In­stead, a ma­jor­ity of City Coun­cil mem­bers have con­demned the pe­ti­tions. La­bor leaders have come out against any changes. And a press con­fer­ence has been held to blast Sin­que­field’s idea on City Hall’s steps.

On Fri­day, Funkhouser re­vealed what he’s up to. The mayor says he has been talk­ing to “lots and lots of peo­ple” — in­clud­ing economists and oth­ers he knows from his 18 years as city au­di­tor — about a two-part plan that could come out by mid-March. ing the civil­ian func­tions of the Po­lice Depart­ment into city gov­ern­ment could save tax­pay­ers mil­lions of dol­lars.”

Sin­que­field has deep enough pock­ets that he can pour a lot more money into his mis­sion of killing the earn­ings tax. He must be taken se­ri­ously.

The pub­lic needs detailed, thought­ful plans — from Funkhouser, but also from other elected and civic of­fi­cials — on how to re­spond to this threat.

GAR­VEY SCOTT | THE KANSAS CITY STAR

Sher­wood Smith of the In­ter­na­tional As­so­ci­a­tion of Fire Fight­ers Lo­cal 42 re­cently spoke against a bal­lot ini­tia­tive to elim­i­nate the earn­ings tax.

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