The Kansas City Earnings Tax
Good for Our Environment - Good for Our children - Good for Our Future
A Report by the Sierra Club, Missouri Chapter
Released March 17, 2011
The Kansas City Earnings Tax and the Environment
On April 5, 2011, voters in Kansas City, Missouri will decide whether to retain the current 1% city earnings tax (or E-Tax). This vote is mandated by Proposition A, passed by voters statewide on November 2, 2010. Since the E-tax provides a significant portion of the city budget, this vote has critical implications for the future of city services, including police and fire protection. This report examines how earnings tax funds support environmental programs in particular, as well as preserves a vital city center. The Sierra Club – Missouri Chapter recommends a “yes” vote to retain the E- tax.
2. Earnings Tax Facts
* The 1% E-Tax is paid both by city residents as well as non-residents who work in Kansas City, as well as by businesses located in the City.
* The average employee paid $244 in E-Tax in Fiscal Year 2010.
* Approximately 40% of the E-Tax is paid by non-residents.
* The E-Tax is the single largest source of revenue in the city budget, providing 44% of the General Fund, and 16% of the total budget.
* The City’s total budget includes income from the E-Tax ($200 million), sales taxes ($150 million), property taxes ($130 million), and utility taxes ($100 million).
* The E-Tax does not apply to social security, retirement, pension, worker’s compensation, unemployment, and disability income.
3. Environmental Programs Funded by the Earnings Tax
The city budget funds a variety of environmental programs through its General Fund. This report will examine three environmentally-oriented expenditure areas that receive a portion of their funding through the General Fund, and provide specific examples of what these programs provide.
a. Parks and Recreation
The General Fund supports the Parks and Recreation Department, which in turn supports a variety of important environmental programs, including:
* Parks – The Department operates 219 parks, including Tiffany Springs Park in Platte County, Robert Hodge Park in Clay County, and Swope and Jerry Smith Parks in Jackson County. This extensive system of parks means city residents have a nearby park for hiking, bird watching, sports, and nature study.
* Lakeside Nature Center – located in Swope Park, this center provides educational programs for thousands of school kids every year, as well as Summer Science camp. For many Kansas City children, this Center provides their introduction to the natural world.
* KC Wildlands “works to conserve protect and restore 11 of the remaining natural communities untouched by development in the Kansas City region by removing invasive plant species, re-seeding and planting native plant species and more.” Volunteers work in targeted high-quality sites to restore native plants and animals. One example is the Hidden Valley Natural Area, located in Clay County near I-435 and Parvin Road, which is being threatened by exotic invasive species and illegal off-road vehicles. Volunteers from the Sierra Club’s Thomas Hart Benton group have adopted this site. (Source: www.kcwildlands.org)
The General Fund supports both the City’s curbside recycling program as well as the recycling drop-off centers. Recycling programs both save money for the city, by reducing landfill costs, as well as benefit the environment by reusing resources. Recycled paper saves trees. Recycled plastic saves oil. Recycled metal reduces the need for mining.
* Residents recycled 1,080 tons at the Metro North Community Recycling Center at Highway 169 and Barry Road at the Metro North Mall parking lot (May 2009 – April 2010, source: Bridging the Gap). A total of 209 volunteers from the community staffed the center, with 62,153 patrons visiting the center. There are also drop-off centers located at 91st and Hillcrest and 4707 Deramus.
* In 2009, Kansas City residents used the voluntary curbside recycling program to recycle 19,000 tons of material, including newsprint, aluminum cans, plastic bottles and cardboard (source: Dept. of Public Works website). Curbside recycling is available to city residents in single family houses and in apartment complexes with six or fewer units.
* The City picks up brush and leaves during the spring and fall, collecting up to 20 bags per residence. This material is then composted and resold.
c. Greening City Government
The General Fund supports a variety of green initiatives to make our city government a cleaner, more efficient entity, e.g. by funding the upfront costs of cleaner technologies. This is turn means cleaner air, reduced long-term costs, and reduced greenhouse gas emissions. Examples include:
* Perform energy efficiency improvements and renewable energy additions to several municipal Buildings - The City is estimated to save $90,000 per year in energy savings (709,000 kWh/yr) and reduce greenhouse gas emissions 440 metric tons of CO2/year by implementing this project (source: www.kcmo.org/kcgreen ).
* Convert all traffic signals from incandescent bulbs to LED bulbs - This project includes the replacement of incandescent lamps in traffic signals with LED lamps, which use much less power and have a longer economic life. The City is estimated to save $131,000 per year in energy savings (1.8 million kWh/yr) and reduce greenhouse gas emissions 1,160 metric tons of CO2/year by implementing this project (source: www.kcmo.org/kcgreen).
* Greening the vehicle fleet – the City has purchased over 300 vehicles that run on compressed natural gas (CNG), which is both cheaper as well as cleaner-burning than regular gasoline. The city shuttle buses at KCI airport all run on CNG.
4. The Importance of a Healthy City Center
One way to look at the impact of the E-Tax is to look at specific programs funded by the General Fund. Another way is to step back from those discrete programs, and consider the role of a healthy city center.
When the city is an attractive place to live, with adequate police and fire protection, efficient public transit, clean air, and amenities like parks and museums, people are drawn to the city. This in turn reduces urban sprawl. This factor is critical, since urban sprawl exacts a high environmental cost, according to the Sierra Club (www.sierraclub.org/sprawl). Kansas City was ranked the 29th worst metro area for sprawl (out of 83 U.S. metro areas) in the report “Measuring Sprawl and Its Impact” by Smart Growth America (www.smartgrowthamerica.org).
- Sprawl increases traffic on our neighborhood streets and highways.
- Sprawl lengthens trips and forces us to drive everywhere. The average American driver spends 443 hours per year - the equivalent of 55 eight-hour workdays - behind the wheel. Residents of sprawling communities drive three to four times as much as those living in compact, well-planned areas. Adding new lanes and building new roads just makes the problem worse - studies show that increasing road capacity only leads to more traffic and more sprawl.
- Sprawl pollutes our air and water.
- As sprawl increases our reliance on cars and driving, it makes our air dirtier and less healthy. Cars, trucks and buses are the biggest source of cancer- causing air pollution, spewing more than 12 billion pounds of toxic chemicals each year, or almost 50 pounds per person. Our wetlands - nature's water filters - are also under attack. Each year more than 100,000 acres of wetlands are destroyed, in large part to build sprawling new developments. Since wetlands can remove up to 90 percent of the pollutants in water, wetlands destruction leads directly to polluted water.
- Sprawl destroys parks, farms, and open space.
- Sprawl destroys more than one million acres of parks, farms and open space each year. This threatens America's productive farmland, and turns our parks and open spaces into strip malls and freeways.-
5. How Could the Earnings Tax Income be Replaced, if the E-Tax Were Repealed?
* The Earnings Tax generated $203.3 million in fiscal year 2009-2010.br /> * To fully replace that income via sales tax, the sales tax rate would have to increase by 3.165%, resulting in a combined sales tax rate of nearly 11% within Jackson, Clay, Platte, and Cass Counties.
** To fully replace the income via property tax, tax rates would rise from the current $1.5294 per $100 assessed valuation up to $4.3894 per $100 assessed valuation, an increase of $2.860 per $100. For a property owner with automobiles with a market value of $35,000 and a home with a market value of $200,000, annual city property taxes would increase by 173% or $1,420 per year.
6. Web Resources for Additional Information
www.kcmo.org - the City of Kansas City site, which includes information on city programs.
www.bridgingthegap.org – a non-profit organization that operates the city’s recycling drop-off centers.
www.sierraclub.org/sprawl – national Sierra Club site includes information on urban sprawl.
www.keepkcgreen.org - information on the environmental programs funded by the earnings tax.
www.keepkcalive.com – website for broad civic coalition that supports the earnings tax.
Sierra Club, Missouri Chapter
P.O. Box 32727, Kansas City, MO 64171