WOULD A THIRD TRY BE THE CHARM?
A year after the idea was dismissed by voters for a second time, the idea of a use tax is again making the rounds among city officials at Parkville.
At a meeting on Tuesday night, the Parkville Board of Aldermen delayed a first reading of an ordinance to authorize an April ballot question that would ask voters to approve a local use tax on out-of-state purchases. First reading of an ordinance is now scheduled for Dec. 6. The delay is due to the city wanting to tweak the proposal a bit to restrict use of the revenue to capital improvements and infrastructure.
The use tax would require the city’s same sales tax rate (currently two percent but will be 2.5% if a city half cent sales tax for public safety is passed in April) to be charged on purchases made from businesses located outside Missouri as charged by businesses located in the city. This, city officials say, would eliminate an inequity between in-state and out-of-state businesses that provides a competitive advantage for out-of-state businesses.
“This is a sales tax on purchases from outside of the state, mostly internet. This puts these purchases on equal footing with purchases from local merchants,” Mayor Dean Katerndahl said this week.
City officials estimated that a use tax would generate about $250,000 to $300,000 per year in new revenue for the City of Parkville.
“The local use tax rate is the same rate as the local sales tax rate. If the local sales tax is reduced or raised by voter approval, the local use tax shall also be reduced or raised by the same action. If local sales tax is applied on a purchase, use tax will not be paid on the same purchase–it’s one or the other, never both,” says a policy report issued by the city in advance of Tuesday night’s board meeting. “It generates local revenue, funds community projects and services and it is not a double tax.”
In November of 2021, Parkville voters overwhelmingly rejected the city’s proposal for a use tax that would have been implemented on certain online purchases. The proposal was defeated with 432 opposed to 243 in favor, a margin of 64% to 36%. Voter turnout was 13.45 percent.
In fact, it was the second time in the past decade that a Parkville use tax has been rejected by voters of the city. In 2013, Parkville voters narrowly rejected a city use tax proposal, with 387 opposed to 377 in favor.
Last year in making the proposal, the city said a use tax would have eliminated an advantage online retailers have over the community’s brick and mortar local retailers, in that a use tax assures out-of-state business pay into the sales tax fund that aids street maintenance, police and other city services.
Platte County already has a use tax in place, as do some other area entities such as Platte City, Kansas City, Platte Woods, Northmoor and Lake Waukomis. More than 200 cities in the state have enacted a use tax through a vote of their residents, Parkville officials say.
In the policy report distributed by the city this week, officials say the city has been informed that grant applications are being recommended for approval (confirmation will occur in January 2023). These projects are:
*The next phase of improvements to Hwy. 9, from Park University entrance west to Main Street, south to Mill Street and west to Crooked Road.
*Sidewalks on Bell Road from Hwy. 45 south to Hamilton Road.
“Both of these projects are being recommended for grant funding, however there are no matching funds available for these projects. A use tax would help leverage grant dollars to be able to finance the matching portion and proceed with these much needed projects,” reads the policy report, which is labeled as being prepared by Melissa McChesney, city clerk, and reviewed by Alexa Barton, city administrator.
City officials said the Hwy. 9 project has an estimated cost of $5 million, which includes $1 million for engineering (which is not eligible for grant funding) and $4 million for construction. The city says the projected grant was initially an 80/20 proposal, but in order to award more projects, Mid America Regional Council (MARC) adjusted the formula to a 64/36 allocation. This would mean $2,560,000 from MARC, with the city match being $1,440,000 of the $4 million needed for construction. Engineering fees would be the city’s responsibility.
Meanwhile, the Bell Road project has an estimated cost of $1,430,000, which includes $150,000 for engineering (engineering fees are not eligible for grant funding) and $1,280,000 for construction. This grant has been adjusted from an 80/20 original plan to a 58/42 allocation formula, which would mean $750,000 from MARC and $530,000 from a city match. All engineering fees would be the city’s responsibility.
“These are important projects for the city and we have done a good job of successfully applying for federal grant funds to help build these projects,” Katerndahl remarked to The Landmark this week.
“Even though we anticipate receiving approximately $3.25 million in federal grants we still have to come up with about $3 million for match and engineering. While we may receive some additional help from the state and county, we sure hope so, we cannot match these grants without additional local revenue,” the mayor said.
The policy report uses wording similar to Katerndahl, noting that a factor in the city’s proposal for a use tax is that the city has “limited funding available for capital projects, including our local streets.”
If there are funds available from a use tax, “much needed capital projects for city projects and infrastructure would benefit from an available funding source,” the report states.
Katerndahl said the decision to delay the first reading is so that the city attorney can add a clause that restricts use of the use tax to capital improvements and infrastructure.
“This clause will bind not only our current board but also future boards to using the funds only for capital improvements and infrastructure,” Katerndahl said Wednesday morning.