Kansas City to Vote on Tax Increase

Voters in Jackson County, Missouri (Kansas City) are being asked to vote for a three-eighths cent increase in the county sales tax to pay for renovations for Arrowhead and Kaufman Stadiums. Voting takes place on April 4th. The measure says that the tax expires after 25 years and is expected to raise about $30 million a year. One estimate is that the tax will cost the typical Jackson county consumer $25 per year.

Readers of this blog can already imagine what the economic impact analysis says about spending $777 million on the two stadiums, but here it is anyway:

Using data obtained from the Chiefs, Wizards, Royals and vendor companies at the two stadiums, expenditures for operations and payroll to support professional games at the Truman Sports Complex total about $309.3 million per year. As this money is spent, it creates multiplier effects in Jackson County (not all of the money is directly spent in Jackson County, however). The following impacts during each year after the capital investments can be anticipated as a result of the combined spending for operations and payroll by the two stadiums, the teams, and vendors.

1. Overall economic activity, or economic output, in the county would be boosted by $412.0 million each year in Jackson County from operations at the two stadiums because of the multiplier effects.

Of course, both stadiums are already in operation, leaving one to wonder if the renovations are supposed to raise operating expenditures by $309 million generating the implied $412 million in new economic activity, if the intent is to confuse voters that new activity will be generated when in fact the figures are what is already occuring, or if the consultants ‘ report involves the implied threat that both the Royals and the Chiefs will leave without the renovations.

2. Personal income of county residents would be expected to be $73.0 million per year as a result of the multiplier effects in the county triggered by the operations at the Truman Complex.

3. Jobs created for the county labor force (i.e., residents of Jackson County) would average 3,260 each year, including jobs held by Jackson County residents at the Truman Complex (i.e., players, coaches, front office, vendors, etc.). Obviously, a great many of the jobs at the stadiums are part-time positions for only part of the year, many at relatively low levels of hourly compensation, but each of these jobs is counted in the 3,260.

At least they aren’t claiming these are 3260 full time equivalent jobs.

Also up for a vote is a use tax to fund a rolling roof that can be moved from covering Arrowhead Stadium to covering Kaufman Stadium. The use tax would be imposed on Kansas City residents who make transactions with out-of-state vendors such as catalogue and direct market sales. Estimates are that the use tax increase would raise $12-$14 million a year. The base for the tax includes a $2000 per year exemption. The tax may be collected automatically if the vendor has a facility in Missouri, but if not, the buyer must file a return with the state. But don’t worry if you don’t pay, because the state does little enforcement on individuals failing to pay use taxes, according to Gary Markenson of the Missouri Municipal League.

It is clear that everyone involved needs to learn some basic tax incidence. as this quote from the Kansas City Star demonstrates:

Even though businesses would pay the bulk of the tax, they could raise prices to make it up, stadium opponents note.

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Author: Dennis Coates

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