UPDATE: Kansas City voters giving strong thumbs up to earnings tax renewal

UPDATE, 9:05 p.m.

Kansas City voters south of the River were voting overwhelmingly in favor of earnings tax renewal Tuesday night. With 94 percent of precincts reporting, the renewal was passing by 77 percent. That’s nearly equal to the 78 percent approval five years ago.

UPDATE, 8:15 p.m.

Kansas City voters in the Northland were signaling strong support for renewal of the 1 percent earnings tax, as preliminary returns came in Tuesday night.

The tax on wages, which is paid by both Kansas City residents and non-residents who work in the city, was supported by 70 percent of Kansas City voters in complete returns from Platte and Clay counties. That’s even higher than the Northland support in 2011, when 68 percent of voters supported renewal. But turnout in the Northland was considerably lower than five years ago.

Under a state law passed in 2010, voters in Kansas City and St. Louis must approve renewal of the tax every five years. The last time this came up, in 2011, Kansas City voters throughout the city supported renewal by a more than three-to-one margin.

The tax constitutes about 40 percent of the city’s basic services budget and is projected to generate about $240 million in the fiscal year starting May 1, to pay for police, firefighters, ambulance, trash collection, street maintenance and other government services.

It is a tax paid on earned wages and business profits; it is not a tax on Social Security or pensions, and retirees don’t pay it. The average annual earnings tax paid in Kansas City is about $340, and the average business profits tax paid is about $2,050.

Nearly 50 percent of the tax is paid by people who don’t live in Kansas City but work within the city limits; about 20 percent comes from Kansas residents and 30 percent from residents of the Missouri-side suburbs. Those taxpayers do not get a vote, because taxes are generally decided on by residents of the city that imposes them.

A half-cent earnings tax was first imposed in 1964 and raised to one percent in 1970. Kansas City officials have said it is a vital source of revenue for city services, and that elimination would require doubling the sales tax, tripling the property tax, or massive budget cuts, including laying off hundreds of police and firefighters.

If voters oppose renewal in this election, the tax would be phased out over 10 years and could not be reinstated.

Opponents have argued that Kansas City has a bloated and wasteful municipal government, and that eliminating the tax would make the city more competitive and welcoming to businesses. They maintain that if the tax goes away, the city would have 10 years to figure out how to fully replace it.

Lynn Horsley: 816-226-2058, @LynnHorsley

This story was originally published April 5, 2016 at 7:56 PM with the headline "UPDATE: Kansas City voters giving strong thumbs up to earnings tax renewal."