If Kurt Schaefer’s bill passes, the earnings tax dies at the end of 2017, no phase out

%{[ data-embed-type=”image” data-embed-id=”” data-embed-element=”aside” ]}%

The biggest news of the day on Tuesday was Missouri Sen. Kurt Schaefer’s introducing legislation that, if passed into law, would end Kansas City’s earnings tax.

Kansas City leaders have suffered an ongoing case of heartburn over the possibility that the city’s voters might choose not to renew the earnings tax in the April election. Last time it showed up on a ballot in 2011, it was retained by 78 percent of voters.

The Columbia Republican’s legislation seems like a far greater threat to Kansas City’s largest source of general-fund revenue. The earnings tax, which collects 1 percent of earnings off the paychecks of anyone who lives or works in Kansas City, accounts for more than $200 million. It funds police, fire protection, public works and a number of other city services.

If voters hadn’t retained it in 2011, or if they choose not to in 2016, the earnings tax would get phased out over 10 years.

A city presentation posted online Tuesday shows what would happen to municipal jobs over those 10 years if the earnings tax got voted down.

It’s easy to see that pink slips would be in abundance at City Hall and across the street at the police station. But the city would at least have some time to adjust to its new financial reality (or come up with new ways to tax Kansas City residents to make up for the lost income).

Here’s an issue with Schaefer’s legislation: It eliminates the earnings tax all at once, after December 31, 2017. That’s a scarier thought for Kansas City leaders. That’s because Kansas City can’t easily raise taxes to make up $200 million a year. Or half that. Or even a quarter of that. Much of that is because Missouri has a Hancock Amendment, which means new taxes have to be put to a vote. 

That means elections could take place constantly in Kansas City. Which means paying for those elections. Which means campaigns for each one. The only people who come out ahead in this process are political consultants.

One can reasonably argue that City Hall should spend money more wisely. But hacking off such a major source of revenue all at once is a chaotic way to run government.

Kansas City will mount an aggressive lobbying effort to stop Schaefer’s legislation in Jefferson City. Kansas City interests are often drowned out by the rural conservatives who have outsized influence in Missouri politics.

For Kansas City, the stakes have rarely, if ever, been higher than they will be in the 2016 session.