CITY COMMISSION AGENDA ITEM

Department:

City Manager’s Office

Commission Meeting Date:  June 13, 2017

Staff Contact:

Casey Toomay

Recommendations/Options/Action Requested:

Receive staff recommendation regarding sales tax renewal and provide direction as appropriate.

Executive Summary:

In 2008, voters approved three special purpose sales taxes – a 0.3% for infrastructure and equipment, a 0.2% for transit, and a 0.05% for expanded transit service.  These sales taxes will sunset in March of 2019.  Staff is recommending the renewal be placed on the ballot for the November 7, 2017 election and seeks direction from the Commission on the following:

• Timing of the election.  Staff recommends placing the renewal on the ballot for the November 2017 General Election Ballot because there would be no cost to the City.  This would also provide an opportunity to place a ballot question on the either the August 2018 Primary Election Ballot or November 2018 General Election Ballot in the event the referendum was unsuccessful.  Alternatively, the City could hold a special election at some other time, the cost of which would range from $50,000 to $90,000.
• Type of sales tax.  The 2008 sales taxes are special purpose sales taxes, which are required by statute to sunset after ten years.  Cities and Counties can also pass general purpose sales taxes, which do not have a sunset requirement.  Sales tax rates must be increments of 0.05% and there are statutory limits on the rate of general purpose and special purpose sales taxes that cities can collect.  Staff recommends asking the voters to renew special purpose sales taxes. 
• Special purpose of the sales tax.  Staff recommends asking the voters to renew the existing 0.3% infrastructure and equipment sales tax and 0.2% transit sales tax for their current special purposes.  Draft spending plans for both the 0.3% and 0.2% sale taxes are attached.  Because transit operations can be maintained without the 0.05% sales tax, staff recommends asking voters to change the special purpose of the 0.05% to affordable housing.  Proceeds from the 0.05% would be placed in the Affordable Housing Trust Fund and would be used to supplement existing homeowner and rental assistance programs including CDBG and HOME programs, and to leverage other dollars to increase the number of affordable housing units in Lawrence. 
• Number of ballot questions.  Staff recommends three separate ballot questions.  This will be a true renewal for two of the 2008 ballot questions and will allow voters to consider each priority independently.  Alternatively, one or two ballot questions could be written, combining the purposes. 
• Sales Tax Audit Committee.  The 2008 ballot language included establishment of a Sales Tax Audit Committee (STAC).  Because the ordinance establishing the STAC references the sales taxes approved in 2008, the committee will sunset along with the existing sales taxes in March 2019.  One of the priority initiatives of the Commission is to evaluate the role of advisory boards and identify opportunities to consolidate or sunset as appropriate.  Given this initiative, staff recommends STAC sunset and their responsibilities be returned to City staff.

The deadline for questions to be placed on the November 7, 2017 ballot is August 7, 2017.  As shown on the attached calendar, this means the Commission must approve the ballot language by Resolution no later than August 1. 

Strategic Plan Critical Success Factor

Safe, Healthy, and Welcoming Neighborhoods

Core Services

Sound Fiscal Stewardship

Fiscal Impact (Amount/Source):

If the ballot questions are included on the ballot for the November 7, 2017 election, there will be no cost to the City for the election.  The estimated cost of a separate election is approximately $50,000 to $60,000, while a mail ballot is estimated to cost $80,000 to $90,000. 

The fiscal impact to the City of the sales tax renewal is projected to be $116,182,000 over the 10 years of the sales tax.  The projected breakdown would be as follows:

Sales Tax Purpose	10 yr. projection
0.3% infrastructure	$63,372,000
0.2% transit	$42,248,000
0.05% affordable housing	$10,562,000
Total	$116,182,000

Failure to renew the sales tax would have significant consequences on City operations.  It is the primary source of local funding for transit operations and without a renewal, transit operations would not likely continue.  It is also identified as the funding source for a number of projects in the City’s Capital Improvement Plan beginning in 2019.

Attachments:

Proposed Calendar for Nov. 2017 General Election

Proposed 0.3% Infrastructure and Equipment Sales Tax

Draft resolution

Draft Spending Plan

Proposed 0.2% Transit Sales Tax

Draft resolution

Draft Spending Plan

Proposed 0.05% Affordable Housing Sales Tax

Draft resolution

Proposed Notice of Special Question Election (Ballot Language)

Reviewed By: (for CMO use only)

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