Early voting on the City of Hutchinson’s proposed sales tax increase begins Monday, Feb. 23, ahead of election day on Tuesday, March 3.
If approved by voters, the total sales tax rate in Hutchinson would increase by 0.75%, from 8.25% to 9% on non-food purchases and from 1.75% to 2.5% on qualifying food purchases. The tax increase would start Oct. 1 of this year and be in place for 10 years, with any renewal requiring another public vote.
In short, the sales tax proposal is the city’s attempt to hold the line on property taxes without making serious cuts in public services and to replace the stormwater fee as a funding mechanism for stormwater management projects.
First, the easy part. If you get a city utility bill for your home, you pay a $4.75 monthly stormwater fee. The fee can be significantly higher for business uses with large paved lots, but we’ll stick with the $4.75 fee. That fee is equal to the additional sales tax one would pay on $633 of taxable purchases a month.
The bigger deal, though, is the balance of property tax, sales tax, or service cuts. In the face of significant inflation in recent years, Hutchinson City Council has relied on the city’s reserves to keep property tax rate increases below the rate of inflation.
The cost of doing that has been a sharp decline in the city’s reserve funds—its savings account, if you will. The city ended 2023 with a general fund balance of $10.2 million. It is budgeted to end 2026 with $1.5 million in the general fund. That is an average decline of $2.9 million per year.
The city simply can’t use those reserves to minimize tax increases anymore. The city will have to increase revenue, decrease services, or both, and not in the amorphous future, but this spring and summer as it budgets for 2027.
We aren’t keen to see the city cut its investments in public safety, economic development, public infrastructure, or quality of life. Timely responses to emergencies are priceless. Shirking economic development or maintenance of public infrastructure now costs more money in the long run. And a good zoo, good trails, and good parks—throughout the city—give families places where they can relax, have fun, and get exercise without an admission fee. Austerity is a short-sighted mindset that hurts the present and gives the future a hole to climb out of.
There are sure to be parts of the budget where the city can become more efficient, and officials should always be looking for those opportunities. But efficiency by itself won’t solve Hutchinson’s budget quandary. There may even be some significant cuts possible with minimal long-term damage. City Council should look for those, too. But we don’t expect they will find close to $2.9 million of those cuts.
That leaves the question of whether sales tax is the right way to address the city’s budget issues.
The best argument in favor of sales tax is that it pulls tax dollars in from people who do business in Hutchinson but don’t own property in the city. That includes families elsewhere in Reno County who shop for groceries, clothing, cars, and more in Hutchinson, as well as more occasional visitors, in town for the National Junior College Athletic Association basketball tournament, visiting the Cosmosphere or Strataca, or getting a meal after a softball tournament at Fun Valley.
The primary downside of sales tax is that it is regressive. Individuals and families with less money generally spend a higher percentage of their income.
But differences in sales tax rates don’t make it cheaper to do routine shopping elsewhere. If Hutchinson voters approve the sales tax increase, but Wichita voters do not approve a proposed 1% sales tax increase the same day, Hutchinson’s combined sales tax rate would be 1.5% higher than Wichita’s. Assuming the 81-mile round trip between The Tribune’s office and New Market Square on the near side of Wichita, a car that gets an average of 27 mpg, and gas costing $2.50 per gallon, a shopper would have to spend $500 in Wichita just to break even on the cost of gas, never mind wear and tear on their car and the value of their time. (If Wichita voters do approve their sales tax proposal, the break-even point increases to $1,500.)
Weighing sales tax’s ability to generate revenue from visitors with its regressive structure, we favor its use as a supplementary part of the city’s budget, rather than the primary driver of revenue. The city’s sales tax proposal fits that role.
– The Hutchinson Tribune Editorial Board