Politicians and civic leaders gather to launch earnings tax renewal campaign

People at City Hall in Kansas City, Missouri, get jittery when they talk about April.

It’s that month when voters get to decide on whether to renew the one percent earnings tax on income and business profits for people who live or work in Kansas City, or phase it out over 10 years.

Without the largest single source of revenue for the city’s general fund, city leaders fear that cuts in the municipal budget will take a ruinous toll on services, particularly public safety.

Some business leaders also fret about the loss of the earnings tax, worrying that the flagship city in the metropolitan area will struggle to tend to basic city responsibilities.

With that in mind, both groups gathered at Union Station’s Chamber Boardroom to officially kick off the campaign to ask voters to renew the earnings tax for another five years.

The event put on a strong show of support from local boosters. Speaking to a crowd of about 150 included Kansas City Mayor Sly James, Northland civic activist Anita Gorman, labor honcho Pat Dujakovich and Kansas City Power & Light CEO Terry Bassham, among others.

The earnings tax generates about $230 million a year. St. Louis has a similar tax. Last time the renewal went on the ballot in 2011, voters in both cities overwhelmingly endorsed its continuation. In Kansas City, 78 percent of voters renewed the tax, while 88 percent in St. Louis affirmed it.

James challenged Kansas City voters to support the earnings tax in greater numbers than St. Louis.

“We can beat St. Louis,” James quipped. “We do it all the time.”

Critics of the earnings tax say it’s regressive in nature, discourages business growth in Kansas City and is unfair because people who work in Kansas City but don’t live there cannot vote on it.

Supporters say the city can’t assemble a practical budget without the earnings tax and will have to survive without it on a combination of cuts to services along with tax and fee hikes, particularly property and sales tax hikes. 

James and others who support the earnings tax have more to worry about than just the April election. There are three bills in the Missouri General Assembly that look to cut into the earnings tax in some way.

The most prominent one is a measure sponsored by Missouri Senator Kurt Schaefer, a Republican from Columbia whose legislation would eliminate the tax all at once in 2017 if signed into law. That represents the most troubling scenario for city leaders. Schaefer’s bill went before the Senate Ways & Means Committee on January 14, where it was met by stiff opposition in testimony by James, the Greater Kansas City Chamber of Commerce and the Civic Council of Greater Kansas City. Local political consultant Woody Cozad testified in favor of Schaefer’s bill.

Cozad used to be a lobbyist for the Kansas City Police Department, but its board of commissioners cut ties with him because he supported the earnings tax repeal in 2011.

Rep. Keith English, R-Florrisant, has a bill like Schaefer’s filed in the Missouri House. It is not scheduled for a hearing.

Rep. Shamed Dogan, R-Ballwin, has a similar version in the Missouri House that would cut the earnings tax out entirely in 2019. Dogan’s bill has not gotten a hearing.

Steve Glorioso, a veteran of Kansas City campaigns and politics, is the campaign manager spokesman for the earnings tax renewal committee, called Yes On Question 1. John McGurk, a Polsinelli attorney who used to work as James’s chief of staff, is the campaign manager.

The Pitch will have a longer, detailed story on the politics of the earnings tax in Wednesday’s edition of the newspaper.

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