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Committee examines countywide sales‑tax apportionment and possible formula changes
Summary
Legislative staff reviewed the statutory countywide sales‑tax apportionment formula and presented alternative distribution methods, and Sedgwick County officials told the committee the current law can penalize counties that lower property tax levies.
Legislative staff presented an overview of local sales‑tax authority and the statutory rules that govern countywide apportionment, then showed alternative apportionment formulas and an itemized county‑by‑city comparison to illustrate how distribution changes could reallocate revenue among cities and counties.
Background: Kansas authorizes local sales taxes (cities, counties, community improvement/transportation development districts) but requires voter approval. When counties levy a countywide sales tax for county purposes, statute defines distribution: half the revenue is distributed by population and half by proportion of property tax levies (a valuation/levy factor). That statutory mechanism can produce counterintuitive incentives: declining a county’s own levies can reduce its share of countywide sales tax distributions.
Key points - Current law and alternatives: Legislative Research offered three alternatives for the 50/50 split: (a) HB 2377 (as introduced) alternative, (b) 100% population distribution, and (c) population plus county valuation only (alternative drafting note: the committee asked staff to correct column three and reissue a clarified table showing county valuation rather than only unincorporated valuations). The committee requested corrected tables for county leaders to review. - Local testimony: Sedgwick County officials said the current formula can penalize counties that reduce levies: their board deliberately reduced their levy but, under the formula, that would have shifted hundreds of thousands of dollars of sales‑tax distributions to municipalities. Sedgwick proposed treating county assessed value including municipal areas (not only unincorporated) to avoid the perverse incentive. - Considerations: Staff outlined policy questions: should county and city sales‑tax authority mirror one another? Should apportionment be allowed to be dedicated to county uses by ballot language? Should special‑purpose county sales taxes have automatic end dates? Should the apportionment basis move away from mill levies toward a population or blended approach?
Committee response and next steps: Members asked for corrected worksheets and expressed interest in a phased transition if any statutory apportionment changes are advanced, citing potential winners and losers. Sedgwick asked for a calculation that treats county valuation as a whole, not just the unincorporated portion.
Ending: Staff said they would refine and reissue the county‑by‑city tables and continue to work with county officials and the Department of Revenue on a follow‑up meeting with corrected apportionment scenarios.
