Missouri Senator Wants To Cap 'Out Of Control' Local Taxes, But Kansas City Will Fight Back
Depending on where you live in Missouri, the amount of sales tax you pay can vary widely.
Those discrepancies exist within Kansas City, where you could pay anywhere from 8.6 percent to 11.6 percent sales tax based on where you are.
St. Louis-area Senator Andrew Koenig wants to limit the total amount local governments can collect.
"Missouri has a problem of having literally hundreds and hundreds and hundreds of taxing jurisdictions," Koenig says.
The Republican from Manchester has pre-filed a bill for next session that would cap the combined local sales tax for any city at 7.275 percent, on top of the statewide sales tax of 4.225 percent.
"You have a quarter cent here, a quarter cent there, a tenth of a cent — and there is not really a good method for keeping a lid on things," Koenig says.
Taxes mostly imposed on out-of-towners, such as on hotel stays and rental cars, would be exempt from Koenig’s bill.
A similar bill capping the combined state and local sates taxes at 14 percent failed last year. Leaders in Kansas City and St. Louis opposed it, as they will likely do with Koenig's bill in 2019.
They say that revenue goes toward important services and projects, and that the state should let cities operate as independently as is possible.
How sales taxes add up in Kansas City
In addition to the statewide sales tax, cities can set their own local sales tax. In Kansas City, the general sales tax in 2017 was 3 percent, with revenue paying for capital improvements, public mass transit, firefighters, public safety and parks. That 3 percent also includes the 1/8-cent Central City Economic Development sales tax, which voters approved on April 4, 2017, to go towards development east of downtown, between The Paseo and Indiana.
In addition to that, smaller jurisdictions can petition to create smaller taxing jurisdictions, such as community improvement districts to spur development within certain boundaries or transportation development districts to fund projects like the streetcar.
Kansas City, Missouri, had 57 of these smaller taxing districts, several of which overlap, in 2017.
The city’s highest-taxed area is near the Kauffman Center for the Performing Arts, which is covered by the Performing Arts CID, the convention center headquarters CID, the downtown streetcar TDD and the zoological district — all adding up to 11.6 percent in sales tax.
Why Kansas City leaders will oppose the sales-tax cap
Among the Kansas City Council's priorities for next legislative session is opposing Koenig's bill.
"Simply to maintain our ability to self-govern," says city councilman Kevin McManus, who leads the council's legislative committee. He says it's part of the city's broad goal to retain autonomy from the state.
While Koenig argues that the state should be able to limit cities from becoming too powerful and overtaxing their own citizens, McManus says to arbitrarily set a cap on sales tax without looking into why certain taxes exist is short-sided.
"The bill that’s being proposed would limit our ability to collect the sales taxes that either have been approved by voters or serve what we believe to be an important service or function," McManus says.
He says Kansas City has seen continued growth, both in population and in economic activity, thanks, in part, to these special taxing districts.
The bill could also threaten Mayor Sly James' proposal to implement a 3/8-cent sales tax to fund quality pre-kindergarden programs across the city. If James' proposal passes, it would raise sales taxes in parts of Kansas City over the 7 percent cap Koenig has proposed.
If both proposals pass, it's unclear who would determine which taxes are scrapped and which stay in place.
"At the end of the day, I don't know how something like that gets upheld or enforced," McManus says.
Should Koenig's bill pass, city leaders could turn to other taxing options, such as a property tax hike, to address infrastructure and other city needs.
One such increase has already been proposed by Mayor Pro Tem Scott Wagner to generate money for affordable housing. Like any citywide sales tax, voters must approve any property tax increase.
Lisa Rodriguez is a reporter and the afternoon newscaster for KCUR 89.3. Follow her on Twitter @larodrig.