Kansas City streetcar sales tax revenues exceed projections

Sales tax collections within Kansas City’s downtown streetcar taxing district grew considerably in the past two years, even before the streetcar started operating.

The downtown streetcar, which runs from River Market to Union Station, gets its operating revenues from a downtown taxing district that imposes a special property tax and a 1-cent sales tax within the taxing district boundaries.

According to the latest data from the Kansas City Finance Department, collections from that 1-cent sales tax within the district have grown 58 percent from fiscal year 2014 through the 2016 fiscal year, which ended April 30. By comparison, overall sales tax receipts citywide grew 16 percent over that same time frame.

Receipts from the 1-cent streetcar sales tax jumped from $3.45 million in fiscal year 2014 to $4.77 million in fiscal year 2015, or 38 percent. They grew to $5.46 million in fiscal year 2016, or 14 percent, according to the finance department and the KC Streetcar Authority.

Significantly, those increased collections occurred before May 6, 2016, when the downtown streetcar actually started operations. They reflect business growth that occurred before the streetcar started carrying passengers. The actual financial impact of streetcar operations has not yet shown up in sales figures or publicly-released sales tax collections.

City finance officials cautioned that it’s not possible to say exactly what caused the increase in sales activity downtown, and how much of that was related to the streetcar and how much is attributable to more residents living downtown.

The growth was more pronounced in fiscal year 2015 than in 2016, which might have been more of a reflection of the 2014 Kansas City Royals’ post-season baseball wins and new crowds to the downtown Power and Light entertainment district.

Tom Gerend, executive director of the KC Streetcar Authority, said the agency is eager to see the impact that actual streetcar operations will have for downtown businesses, and is starting to do some surveys to gauge that impact.

“We are thrilled to see the new developments, new residents and new energy translate into increased activity and sales for downtown business,” Gerend said.

Gerend noted that the sales tax collections in 2015 and 2016 were significantly higher than the $4.4 million that officials had estimated and budgeted for each of those years.

This story was originally published September 14, 2016 at 4:00 PM with the headline "Kansas City streetcar sales tax revenues exceed projections."