In less than 120 days, Kansas City voters will decide whether they want to renew the city’s earnings tax, the 1 percent levy on income and profits that provides a good chunk of Kansas City’s revenue.
Last week I talked with a handful of city bigwigs about the renewal effort. They’re still convinced the e-tax will pass easily — it remains more popular than property taxes, and sales taxes are already sky-high — but they’re concerned that a series of political missteps has complicated their work.
The e-tax renewal campaign may be closer than some realize.
Some challenges are coming from outside the city. A proposal by Missouri Sen. Kurt Schaefer, a Columbia Republican, to abruptly end the earnings tax in 2017 infuriated Kansas City’s elites, who consider the measure a political stunt. Schaefer’s campaign for attorney general is being bankrolled by St. Louis zillionaire Rex Sinquefield, a fierce critic of the earnings tax.
Few Kansas City leaders think Schaefer’s bill will pass — it would need a veto-proof majority, which would be tough. That might change, though, if the earnings tax becomes entangled in the controversy over state funding for a new football stadium in St. Louis.
Many Republicans remain furious at Gov. Jay Nixon’s push for millions for a new football stadium. If state funding is part of any final stadium package, some lawmakers may seek to punish St. Louis, and Nixon, by eliminating the e-tax. Kansas City could be caught in that squeeze, local officials fear.
Even if the Schaefer measure fails, the debate will come just as the earnings tax campaign gets underway in the spring. The city’s voters will be bombarded with anti-tax messages from Jefferson City just as they turn their attention to the April ballot.
Potential litigation challenging part of Kansas City’s e-tax — prompted by a recent U.S. Supreme Court ruling — could add to the negative headlines.
In any case, Schaefer’s measure suggests Sinquefield will be an active participant in the 2016 renewal campaign here. He could easily drop $1 million or $2 million into that anti-tax effort, an amount supporters might be hard-pressed to match. That’s a concern.
Finally, controversies over the downtown convention hotel, petitions and tax increment financing may cloud voters’ views about City Hall. Mayor Sly James won a landslide re-election this year, yet some officials privately worry that his aggressive approach may be alienating some voters. Removing a TIF commissioner for voting the wrong way exacerbates that impression, officials tell me.
Not to mention the potential of actually having the hotel, or other projects, on the April ballot. That would make the renewal campaign even more difficult.
Kansas Citians decided to renew the earnings tax in 2011 — during Mark Funkhouser’s final days as mayor. The vote to renew the levy was so overwhelming, even in light of Funkhouser’s shortcomings, that the city spent little time over the last five years studying potential replacements for the tax.
City leaders don’t think the earnings tax will fail this time either, but it may be close. If it is, Kansas City may want to spend the next five years trying to find a Plan B before 2021, the next time voters get a crack at renewing the tax.