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