Kansas coalition seeks to fix food sales tax bug

The Kansas League of Municipalities supports elimination of the state's food sales tax, but needs to solve an unexpected problem. Many cities rely on sales tax revenue to pay bond programs, and that source would be diminished once the tax ends.

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State News

December 5, 2022 - 2:27 PM

Spencer Duncan, a lobbyist with the Kansas League of Municipalities, outlines the organization’s 2023 legislative agenda shaped by more than 600 city government leaders for a Kansas Reflector podcast. Photo by (Sherman Smith/Kansas Reflector)

TOPEKA — The Kansas League of Municipalities is a proponent of eliminating the state’s 6.5% sales tax on food purchases, but an unexpected wrinkle complicates that policy position.

The 2022 Legislature and Gov. Laura Kelly approved a law dropping the statewide sales tax on groceries to 4% on Jan. 1. It would fall to 2% on Jan. 1, 2024, and vaporize one year later. The Republican-dominated 2023 Legislature, which convenes Jan. 9 in Topeka, will have an opportunity to address Kelly’s plea to immediately strike the state’s share of the food sales tax. High inflation has bolstered political support for the move.

Here’s the catch: Reduction and elimination of the state food sales tax would undermine the ability of cities, such as Newton, to meet obligations of STAR bonds used to finance economic development projects that included retail stores selling groceries. The STAR bond program requires debt to be paid off with sales tax revenue, but that source of cash would be diminished when the state’s portion of the food sales tax was shelved.

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