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Shall the City of Derby, Kansas, be authorized, upon expiration of the existing one-half percent (1/2%) Citywide retailers’ sales tax, to impose a one percent (1%) Citywide special purpose retailers' sales tax, the proceeds of which shall be used only for the following purposes, including the payment of financing costs related thereto: (1) public safety equipment and capital improvements; (2) streets and sidewalks maintenance and improvements; and (3) parks and trails maintenance and improvements; with the collection of the sales tax to commence on January 1, 2025, or as soon thereafter as permitted by law, and shall terminate ten years after its commencement; all pursuant to the provisions of K.S.A. 12‑187 et seq., as amended?
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The need is now! The current Derby Difference Sales tax is expiring Dec. 31, 2024. The City has listened to its residents. The three top identified priorities from the community-wide survey in early 2023 were more street maintenance to occur, need for continued investments in parks and public safety. Derby is growing and sales tax numbers have increased as more visitors from outside of Derby come to shop and spend time here. Quality of life investments and quality infrastructure investments available from the proposed sales tax will continue to help make Derby the community of choice in Sedgwick County. If the new sales tax is approved by voters, the City will commit more money to street maintenance and parks.
The ballot question will be on the Nov. 7, 2023 ballot. Your voting location will depend on where you live in Derby. The last day to register to vote for the election is Oct. 17, 2023. Early voting will occur starting Oct. 23, with local early voting in person starting on Nov. 2. Contact the Sedgwick County election office at 316-660-7100 or visit www.sedgwickcounty.org/elections for information on voting locations, dates, times, etc.
The City listened to its residents. A community survey was sent out in early 2023 that measured how residents want to best invest tax dollars and their willingness to pay for items. The top three preferences from residents from the survey were: maintaining high quality public safety, streets/sidewalks/drainage maintenance and improvements, and city parks and trail maintenance. The proposed ballot question focuses on addressing those top three items from the survey. Of the proposed 1% sales tax the City Council intends to spend 45% on street maintenance, 45% on park maintenance and 10% on public safety equipment and capital improvements.
The City of Derby currently has a 0.5% Derby Difference Sales tax. If the newly proposed sales tax passes, then Derby will have a 1% local sales tax. The overall rate in Derby is currently 8%. This includes the State of Kansas sales tax rate at 6.5%, Sedgwick County at 1%, and Derby at 0.5%. If Derby approves the new 1% sales tax, it will still be tied for the second lowest total sales tax rate of all first-class cities in Kansas at 8.5%. See chart.
The current half-cent sales tax isn’t enough to adequately address the maintenance and improvement needs of our over 430 lane miles of streets and 28 miles of hike and bike trails in Derby while at the same time keeping our local property tax rate at a lower level. Street maintenance prices have increased over 40% in the last few years putting the City further behind on needed maintenance efforts with current funding.
new Parks Master Plan identified ~$91M in maintenance and improvement projects. While the increased sales tax amount won’t allow us to address all of those master plan concepts, it will allow Derby to continue to separate itself from other communities in Kansas with its high-quality parks system and perform major maintenance to neighborhood parks including updates to playgrounds, additions of restrooms, and adding shade and walking trails.
The increased sales tax will also allow us to perform amenity upgrades at some regional parks such as High Park and Garrett Park with things such as splash pads, field improvements, and pickleball courts. Decarsky Park Phase II will also be completed.
Lastly, the purchasing of public safety equipment and capital improvements with sales tax funds will allow the City to shift the burden from utilizing property tax funds on those purchases. This will allow the City to stabilize or reduce the mill as funding is shifted to sales tax funds from property tax funds.
The new sales tax will generate approximately ~$4 to $5 million per year in new revenue for public safety equipment and capital improvements, streets and sidewalks maintenance and improvements, and parks and trails maintenance and improvements. We estimate that over the 10-year life of the tax it will generate ~$90-100M.
If approved, the City would start to collect the new sales tax at the beginning of 2025. The city would look at immediately increasing our annual street maintenance budget to allow for further maintenance needs to be met. Implementation of early projects from the Parks Master Plan would begin implementation (this includes things such as High Park Phase I design, Decarsky Park Phase II, and improvements to neighborhood parks like Woodlawn and Crane Park). For public safety equipment and capital improvements, the City would be purchasing Police vehicles and Fire equipment starting in 2025 and would look to fund construction for additional office and training space at the Derby Police Department building.
The proposed increase of 0.5% in local sales tax is a minimal incremental increase. A few examples of what that increase equates to in your wallet: $0.50 on a $100 grocery purchase, an extra $50 on a $10,000 purchase, and an extra $250 on a $50,000 purchase. In addition, the State of Kansas is eliminating the State sales tax on food you buy at the grocery store. This means the average household in Derby will already be experiencing a decrease of ~30% on their grocery food tax due to the elimination (state sales tax rate on food is currently 4% and by Jan. 1, 2025 it will be 0%), even with the increase in the City’s portion of 0.5%.
Each person has to determine for themselves the level of taxes they wish to pay for the community they wish to live in. There is no such thing as a perfect tax, a sales tax is as fair as any tax. It is based on spending rather than owning.
The 2023 community survey showed a majority of Derby residents greatly prefer sales tax over property tax. Nearly 6,000 people outside of Derby come here to work each day. This is in addition to the people who come for medical services, dining, shopping and to enjoy regional attractions such as Rock River Rapids, the Library, and to use our parks system.
In addition, Derby has a pull factor of 1.26, which means nearly 30% of sales tax revenues for the City come from people who live outside Derby and choose to shop in Derby. Those same visitors who shop visit our parks and drive on Derby streets, benefitting from maintenance and improvement of those items, without having to pay the property taxes that are utilized to provide them. A sales tax helps more equitably distribute the costs associated with providing the services enjoyed by many outside the City and helps relieve the property tax burden on Derby residents.
If the proposed sales tax does not pass, the City will focus our current resources on basic street maintenance items and purchasing of public safety equipment through property tax funds. It is likely that several of the parks master plan improvement items will not be met or deferred well into the future. If the City were to not have a local sales tax at all then then the City Council will look at addressing the funding shortage from either increases in other revenue sources such as property tax or cuts in services.
First, the ballot language legally limits the use of funds to what is specified in the question. That keeps the dollars from being used for other things.
Second, the City will maintain a web page and provide regular updates to the public regarding revenues and expenses and what projects are being completed with the sales tax.
Finally, the City of Derby has a good track record of doing what we say we are going to do with sales tax funds. The 2003 sales tax was used to build Rock River Rapids and ended in 2009. The 2007 sales tax was used to build the library and started in 2010 and ended in 2014. The current Derby Difference Sales tax started January 1, 2015 and has been used to hire firefighters and pay for Derby Fire and Rescue Operations, pay for Derby Public Library operating costs, and used to build parks such as Madison Avenue Central Park and Decarsky Park Phase 1.
Our primary focus is accountability. The sales tax ballot language lists specific categories for how the funds can be used. These categories are legal limitations. From a budgeting and accounting perspective, the sales tax fund will be separated from our General Fund and all other accounts so there is never confusion or concern about the use of funds. The annual allocation of funds for projects will be approved by the City Council during a series of open meetings intended to address our annual capital improvement planning. This allows for full transparency and the public’s eye on the use of funds. Finally, this special fund will be included in the City’s annual financial statements, which are audited. The audit is conducted by a third-party auditing firm.
The City would like to fully implement the pavement management plan that was implemented in 2021. That 10-year plan originally looked at the City using ~$800K in property tax funds to supplement special street and highway funds for street maintenance activities. The plan recommended the City get close to maintaining a pavement condition index (PCI) of 70 and streets backlog of 15%, but would require $2.7M in spending annually to achieve that.
City Council has funded the plan at $1.6M since 2021 due to lack of funding to get up to $2.7M. Costs have increased 40%+ for street maintenance activities since 2021 so more funding is needed to appropriately maintain City streets and sidewalks. The proposed questions would allow the City to maintain streets in a better condition utilizing sales tax funds. With the 1% sales tax the City would able to spend ~$2M more annually on street and sidewalk maintenance. This would greatly improve the pavement rating for streets in Derby.
If the new sales tax were to pass the City would begin implementation of the Parks Master Plan that was adopted by the City Council in 2022. The plan includes nearly $90M worth of maintenance and improvement items including some of the following: revitalization of several neighborhood parks including playground updates, restrooms and shade structures, Decarsky Park Phase 2 completion, trail maintenance and improvements, redevelopment of some of the larger regional parks in Derby (High Park, Garrett Park, Hand Park are examples) to include amenity improvements such as splash pads, pickleball courts, and enhanced trail and field improvements, Rock River Rapids improvements, and the purchasing of parks equipment such as mowers/tractors/etc.
The sales tax can be used for the purchase of fire engines and trucks, fire hose and personal protective equipment, police cruisers, police body cameras/software. The Derby Police Department building needs additional office and training space so a portion for the sales tax could be used to cover those design and construction costs.