Item Coversheet
City of Independence
AGENDA ITEM COVER SHEET
BILL NO. 17-0491st R.

Agenda Title:

17-049 - 1R. An ordinance imposing a Transportation Sales Tax at the rate of one-half of one percent of the receipts from the sale at retail of all tangible personal property or taxable services at retail within the City of Independence, Missouri, to be effective January 1, 2020, which shall remain in effect at said rate thereafter until repealed, subject to the approval of such ordinance by the voters of the City, all as provided by the Transportation Sales Tax act of the State of Missouri; and further calling for the proposition adopting said Transportation Sales Tax to be placed on the ballot at the regularly scheduled election to be held August 8, 2017, and proposing the form of the ballots to be employed at said election and directing the City Clerk to do all things called for by law in connection with the holding of said election. 
Recommendations:

Staff recommends approval of the ordinance.
Executive Summary:

The current one-half cent Transportation Sales Tax is set to expire on December 31, 2019. Based on the recommendations of the citizen Street Sales Tax Renewal Evaluation Committee, an ordinance is recommended to seek renewal of the tax on the ballot for the election on August 8, 2017. 
Background:

The Street Sales Tax Program was first approved in 1998 and extended in 2002 and 2007. This is the primary source of funding for the city's street maintenance efforts including asphalt overlay; bridge and culvert repair; street and intersection improvements; safety enhancements; and sidewalks to parks and schools. A limited portion of funding (approximately 3-5%) has been used for special operating expenses such as major snow removal equipment, Pavement Condition Index (PCI) studies, and limited personnel. The one-half cent sales tax generates approximately $8.7 million each year and is crucial for ongoing maintenance and operations. The current Transportation Sales Tax is set to expire on December 31, 2019.

 

On December 5, 2016, the City Council, by Resolution No. 6169, appointed a nine-member Streets Sales Tax Renewal Evaluation Committee to engage citizens in evaluating current uses of funding provided by the Street Sales Tax. The committee was asked to review current street maintenance services and needs in order to make recommendations to City Council regarding extending the existing tax. 

 

The committee concluded its work and reported findings to the City Council at a study session on April 24, 2017. The committee made the following recommendations:

  1. Renew the sales tax at one-half percent.
  2. Seek a perpetual renewal.
  3. Limit the percentage for operating costs to 5-8% of annual revenues.
  4. Continue to leverage funds for state and federal transportation grants. 
  5. Continue to appoint a citizen oversight committee to ensure wise spending. 

 

At the direction of City Council following the study session, staff prepared an ordinance, based on the committee's recommendations, to prepare a ballot question for the election on August 8, 2017, to renew the sales tax. 



Fiscal Impact:

The current sales tax generates approximately $8.7 million annually for transportation needs. It is the only source of funding currently available for routine street maintenance including asphalt overlay. If the sales tax is not continued beyond its expiration on December 31, 2019, the City will need to identify new revenues or make significant cuts in street repairs or other services to meet basic transportation needs. In addition, the City has historically been successful at leveraging Transportation Sales Tax funds to capture state/federal grants at a ratio of 1.28 to 1. If the sales tax is not renewed, the City will likely forfeit future grant opportunities. 



Department:          City Manager's OfficeContact Person:          Lauren Palmer


REVIEWERS:
DepartmentAction
City Managers OfficeApproved
Finance DepartmentApproved
Finance DepartmentApproved
Law DepartmentApproved
City Managers OfficeApproved
City Clerk DepartmentApproved

Council Action:          Council Action:         

ATTACHMENTS:
Description
Street Sales Tax Renewal Ordinance