TOPEKA — The Kansas League of Municipalities is a proponent of eliminating the state’s 6.5% sales tax on food purchases, but an unexpected wrinkle complicates that policy position.
The 2022 Legislature and Gov. Laura Kelly approved a law dropping the statewide sales tax on groceries to 4% on Jan. 1. It would fall to 2% on Jan. 1, 2024, and vaporize one year later. The Republican-dominated 2023 Legislature, which convenes Jan. 9 in Topeka, will have an opportunity to address Kelly’s plea to immediately strike the state’s share of the food sales tax. High inflation has bolstered political support for the move.
Here’s the catch: Reduction and elimination of the state food sales tax would undermine the ability of cities, such as Newton, to meet obligations of STAR bonds used to finance economic development projects that included retail stores selling groceries. The STAR bond program requires debt to be paid off with sales tax revenue, but that source of cash would be diminished when the state’s portion of the food sales tax was shelved.
“We absolutely support the lower food sales tax, and we support the Legislature doing it away with it immediately if they can,” said Spencer Duncan, a lobbyist for the Kansas League of Municipalities.
On the Kansas Reflector podcast, Duncan recommended lawmakers consider an alternative to possible default of STAR bonds tied to tax revenue on grocery sales. He said the state’s large surplus would allow resources to be set aside to cover retirement of that long-term debt.
The League of Municipalities was founded in 1910 and directly represents 530 member cities, but generally serves interests of all 625 cities in Kansas. In addition to lobbying, the League of Municipalities conducts training and education programs on public transparency and government leadership. The League’s attorney took more than 2,000 calls this year from local government officials seeking legal advice.
The legislative priorities of the League of Municipalities runs from property and sales tax issues to policy on water, traffic codes, housing, mental health, asset forfeiture, liquor regulation, infrastructure, energy, pension systems and state mandates. It touches on longstanding local government subjects, including annexation, eminent domain, city and county consolidation, home rule, elections as well as police powers.
Duncan said water quality and quantity may not seen like a forefront issue for the League of Municipalities, but diminishment of the Ogallala Aquifer, drought and climate change posed a threat to growth and viability of communities. The organization urged legislators to aggressively pursue conservation, protection and development of water supplies. The League also recommended the state take action, in consultation with municipal suppliers, to address controversy about “over-appropriated surface and groundwater resources.”
“If you want to the truth, but we have hit the point where a lot of the legislators, especially from western Kansas, have said, ‘Enough is enough,’” Duncan said. “We also recognize that what works in western Kansas is different than what works in southeast Kansas, what works in the middle of the state or works in eastern Kansas. There needs to be nuances in that legislation to give those locals the ability to deal with their specific water issue, because they’re different.”
Another of the League of Municipalities’ priorities would be for the Legislature and governor to affirm state law allowing non-certified attendants to drive ambulances with a lone medical attendant providing care to the patient. Under current regulatory standards, however, both staff in the ambulance must be medical professionals.
Duncan said the regulation was a hardship in communities with a modest number of ambulances and crews. The staffing requirement undermined the ability of cities to respond to emergencies, he said.
The League of Municipalities also requested the state invest more in rural housing, including expanded use of tax credits, loan guarantees and other devices to spur construction of quality housing. Specifically, the League proposed the state create a $100 million revolving low-interest loan fund to finance Rural Housing Incentive Districts.
Duncan also said the organization supported bills to streamline the ability of local governments, neighborhood associations and private businesses to deal with blight of abandoned, nuisance and foreclosed housing.
“Not a city that’s not dealing with the housing problem,” he said. “We’re not asking for the free money, but a lower interest rate loan that these cities could take out to then build some of these developments and then fix some of these blight issues and rundown houses and turn them flip them around.”
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