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An editorial by Mayor Mike McDonough supporting the proposed user tax

On Nov. 2, Raytown voters will be asked to go to the polls and vote “yes” or “no” on a local use tax. This single ballot question will be a game changer. If passed it will generate an estimated $200,000 to $400,000 annually for our general fund. It would generate funds to help pay for such city services like street repairs, street maintenance, and additional police officers.

How will this be funded? Simply by doing what Raytown citizens are already doing, shopping online with certain out-of-state vendors. We all know the shift to online shopping reached an all-time high during COVID-19. In fact, nationally, consumers spent $861 billion online with U.S. merchants in 2020, according to Digital Commerce 360 estimates. That is a 44 % increase from the previous year. Consumers are using internet sales as their primary shopping method, and currently the City of Raytown does not receive sales tax on those purchases. That’s 2.5 % on each transaction that the city is not collecting. This small percentage adds up over time and across purchases.

Therefore, it is so important for our citizens to carefully consider this ballot question and what it will mean for our city.

I say this all the time. Raytown is a great town. Our city is rich in community spirit. We are proud of what our city offers. If we are to maintain our quality of life, we must level the field between local brick and mortar stores and online retailers.

Right now, the city is using its reserves to keep up with maintaining basic city services. City property taxes have remained the same since 1978. Most other taxes the city collects are dedicated for specific purposes and cannot be used in the General Fund. So, let’s just think about this. Are you making the same wage from 1978? Of course not. Why should the city be expected to try and meet current day expenses with a 1978 paycheck?

Many untruths and misperceptions are being circulated about the use tax. Here are the facts:

 

  1. It’s Not a tax increase. The local use tax will not increase or change our local sales tax. It will only be applied to some out-of-state online purchases.
  2. It is Not a double tax. A local use tax would only be applied to goods purchased, delivered and used in Raytown from certain online and out-of-state vendors, instead of a sales tax. You will never pay both taxes on a single transaction.
  3. It is Not a new tax. Local retailers are already collecting a local sales tax. A use tax would allow the city to collect a use tax (sales tax) from out-of-state retailers or online vendors.

In simple terms, an online sales tax, better known as a use tax, simply requires online merchants to charge sales tax, which is then issued to the municipality in which the purchase was made. In Raytown, brick and mortar stores charge a 2.5% local sales tax, which is the exact same amount consumers would pay for online purchases if the use tax passes.

You see, it is the responsibility of your local government to offer services that citizens expect, like roads and public safety. In Raytown, those items, among many others, are paid for by sales tax dollars. The longer Raytown goes without a use tax, the harder it will be for the city to support economic development projects. If a city cannot provide support to economic development, then it will be more difficult to attract new businesses and new residents, as well as keeping the longtime residents here.

Let me say this. I am not a tax and spend kind of guy, but this city has done all it can with the resources we are given. Expenses keep going up, while the citizens keep expecting more and better services. These services take money to maintain and improve. We all want better roads, police and infrastructure. It takes money. We are losing or leaking tax dollars to internet sales at a rapid rate. It is time to make things fair for the brick-and-mortar stores that have a footprint in this city and must collect taxes on their sales. Please be educated on what this measure truly means for us now and on into the future. It is time to replenish the supply of tax dollars lost to internet shopping so that we may continue to support city services and keep this wonderful city moving forward, not falling behind.

This city is a wonderful place to live, work and play. Give your city government the tools to maintain services and move forward with projects to enhance our lives here. I am asking as your Mayor and longtime fellow citizen to please vote yes on this measure on November 2nd, 2021.

Thank you for your time and thank you for your vote for our town’s future. God Bless.

Sincerely,
Mayor Mike McDonough

An editorial by Alderman Greg Walters opposing the user tax

Reprinted FROM THE Kansas City Star OCTOBER 29, 2021

Raytown Voters do not need to handThe following is a Guest Editorial by Ward 1 Alderman Greg Walters. It was originally published on Ocober 29, 2021. Mr. Walters is serving in his 30th year as a member of the Raytown Board of Aldermen. He also publishes a weekly news/blog named the Raytown Report since 1997. The Raytown Report can be accessed at www.raytownreport.blogspot.com

over a blank check in Sales Use Taxes 

On Tuesday Raytown voters will decide the fate of a new 2.5% Sales Use Tax. This Band-Aid approach of slowly ratcheting up the cost of living with a new sales tax is deeply flawed.

Pro tax forces have run a campaign of misinformation to persuade voters to buy into this unfair and regressive tax increase.  They complain inflation is costing the city tax dollars, particularly in franchise tax fees.

That is nonsense.

Franchise taxes in Raytown are paid for by homeowners and businesses when they pay utility bills. These taxes are assessed on how much you pay for electricity, natural gas, telephone service (cell and landline), and cable services. Franchise taxes are tied directly to inflation. If the cost of your service goes up, so does the franchise tax you pay.

All sales taxes are tied directly to inflation as well. For instance, the more you spend on groceries, the more the city makes. The pro tax people claim the city has had declining revenues. That is simply not true.

In fact, in 2019/2020 (at the beginning of the Covid-19 Pandemic) the city actually had a banner year. Sales tax revenues have remained robust into 2021. Because of inflation, city tax revenues will continue to rise.

Real estate and personal property tax revenue is on the rise as well. Want proof? Check out the increase of what homes are selling for in the Raytown area. There is a housing shortage. Demand has driven prices up. Higher values means more real estate tax revenue for the city.

Another falsehood being spread by the pro-tax people is that this new Sales Use Tax is a tax on internet retailers.

That is extremely misleading.

If this Sales Use Tax passes purchases from out of state internet sellers would be charged an additional 2.5%. The vendor does not pay the tax.

As with all sales taxes, the vendor acts as an agent for the taxing entity. The retailer remits the sales tax collected to the State of Missouri. The state redistributes the tax collected to local governing entities.

An interesting fact about the Sales Use Tax is that less than half the cities in the State of Missouri collect it.

There is also a question of what is fair and equitable for Raytown taxpayers.

The Use Tax is a regressive tax.

It hurts those most who have the least. It is a financial drain on low and fixed income households as compared to those with higher incomes.

A seatmate of mine on the Raytown Board of Aldermen, Derek Ward, has suggested the city should look at Municipal Bonds.

A Better Way.

Municipal Bonds would raise more money, more quickly, than levying a Sales Use Tax on Raytowners. Best of all, it would jump start long overdue improvements to city streets, particularly in our neighborhoods.

What Raytown really needs is more accountability from its elected leaders. The proposed 2.5% Sales Use Tax provides none.

All the money collected under the proposed Sales Use Tax will go into the general fund. No earmarks for improving our city’s infrastructure. No money set aside for improvements to neighborhoods.

A Municipal Bond is different because the money from bonds can only be spent on what the voters are promised.

Such bonds are valuable because they are enforced by Bond Covenants that are iron clad.

If voters approve the Sales Use Tax there is no guarantee where the money will be spent.

Therefore, no accountability.

It would be accurate to say you are writing a blank check to City Hall. Those blank checks to City Hall have not worked in the past.

Those blank checks will not work now.

VOTE NO Sales Use Tax

Special Election

Tuesday, November 2, 2021

Better yet, Vote No and remind your neighbors, friends and family to do the same.

Please note my new email address:     greg@serviceprintingandgraphics.com

Greg Walters

Service Printing & Graphics, Inc.

1146 Harrison

Kansas City, MO 64106

greg@serviceprintingandgraphics.com

www.serviceprintingandgraphics.com

816-842-9068      office

816-517-6852      cell

816-842-4763      fax

Proposed USE Tax = Mail order and Internet Sales TAX

The proposed “Use Tax” is a tax on items you order shipped to you. I found it hard to find any information about the specifics, so I did a little research and found a copy in the Board of Aldermen packet for Aug. 17th and will include it in this post. 

The city does need more income. This may help. I would suggest that more effort also be placed in getting real valuations for many business properties, especially on the 350 highway. 

I assume that this will mirror Missouri in not taxing prescription medicine, but will tax food. Missouri being one of the few states that does not exclude food from sales tax, but does exempt drugs if they are prescription. 


CITY OF RAYTOWN Request for Board Action​​ 

Date: August 12, 2021 Bill No.: 6579-21 To: Mayor and Board of Aldermen Section No.: III-A-9 From: Damon Hodges, City Administrator​​ 

Department Head Approval:​​ 

Finance Director Approval: ​​​​ ________________________​​ (only id funding is requested)

City Administrator Approval:​​ 

Action Requested:​​ Request approval of ordinance to authorize a question regarding a use tax to be placed on the November 2, 2021 ballot.

Recommendation:​​ Approve the Ordinance.

Analysis:​​ Pursuant to the authority granted by the provision of Sections 144.060 through

144.761 RSMo., the City of Raytown is authorized to ask voters to approve a use tax.

A use tax applies to purchases from out-of-state retailers. Currently, someone making local purchases pays the City’s sales tax rate of 2.50% on every purchase (1% General Fund, .50% Transportation Fund, .375% Capital Fund, .50% Public Safety Fund .125% Park Fund). ​​​​ The City currently does not have a voter approved use tax; therefore, any items purchased from a business located outside of Missouri does not require the business to collect and remit the local sales tax.

Adoption of a use tax would require that the same tax rate is charged on items purchased locally or online.

The City of Raytown took similar steps in August 2016, when voters were asked to consider an initiative dealing with out-of-state motor vehicle sales, trailers, boats, outboard motors and RV’s. Voters approved the continuation of the tax by 72%.

The Missouri Municipal League in conjunction with the Missouri Department of Revenue, has completed an extensive analysis regarding the potential revenue being lost across the State in those cities that do not have a use tax. A use tax would generate an estimated $400,000.00 annually, dependent on the City’s gross receipts.

Alternatives:​​ Failure to adopt this ordinance would leave the City without the funds.

Budgetary Impact:​​ 

Not Applicable

\\EDGE\administration\Board​​ of Aldermen Meetings\AGENDAS-BOARD OF ALDERMEN\Agendas 2021\08-17-2021\Ord Use Tax 2021 RBA.doc

BILL NO. 6579-21 ORDINANCE NO.​​ _______ SECTION NO. III-A-9​​ 

AN ORDINANCE IMPOSING A USE TAX AT THE RATE OF TWO AND ONE-HALF PERCENT (2.5%) FOR THE PRIVILEGE OF STORING, USING, OR CONSUMING WITHIN THE CITY ANY ARTICLE OF TANGIBLE PERSONAL PROPERTY PURSUANT TO THE AUTHORITY GRANTED BY AND SUBJECT TO THE PROVISION OF SECTIONS 144.600 THROUGH​​ 

144.761 RSMO; PROVIDING FOR THE USE TAX TO BE REPEALED, REDUCED OR RAISED IN THE SAME AMOUNT AS ANY CITY SALES TAX IS REPEALED, REDUCED, OR RAISED; AND PROVIDING FOR SUBMISSION OF THE PROPOSAL TO THE QUALIFIED VOTERS OF THE CITY FOR THEIR APPROVAL AT THE GENERAL ELECTION CALLED AND TO BE HELD IN THE CITY ON NOVEMBER 2, 2021, AND PROPOSING THE FORM OF THE BALLOTS TO BE EMPLOYED AT SAID ELECTION AND DIRECTING THE CITY CLERK TO DO ALL THINGS CALLED FOR BY LAW IN CONNECTION WITH THE HOLDING OF SAID ELECTION​​ 

WHEREAS, the City has imposed local sales taxes, as defined in Section 32.085 RSMo., at the rate of 2.50%; and,

WHEREAS, the City is authorized, under Section 144.757 RSMo., to impose a local use tax at a rate equal to the rate of the local sales taxes in effect in the City; and,

WHEREAS, the proposed City use tax cannot become effective until approved by the voters at a municipal, county or state general, primary, or special election; and,

WHEREAS, the Board of Aldermen of the City of Raytown, Missouri, has determined it would be in the best interests of the City of Raytown, Missouri to impose a use tax;

NOW THEREFORE, BE IT ORDAINED BY THE BOARD OF ALDERMEN OF THE CITY OF RAYTOWN, MISSOURI, AS FOLLOWS:​​ 

SECTION 1 – SUBMISSION TO THE VOTERS. Pursuant to the authority granted by, and subject to, the provisions of Sections 144.600 through 144.761 RSMo., a use tax is imposed for the privilege of storing, using or consuming within the City any article of tangible personal property. This tax does not apply with respect to the storage, use or consumption of any article of tangible personal property purchased, produced or manufactured outside this State until the transportation of the article has finally come to rest within this City or until the article has become commingled with the general mass of property of this City.

SECTION 2 – RATE IMPOSED.​​ The rate of the tax shall be two and one-half percent (2.50%). If any City sale tax is repealed or the rate thereof is reduced or raised by voter approval, the City use tax rate also shall be deemed to be repealed, reduced or raised by the same action repealing, reducing, or raising the city sales tax.

SECTION 3 – BALLOT FORM.​​ This tax shall be submitted to the qualified voters of Raytown, Missouri, for their approval, as required by the provisions of Section 144.757 RSMo., at the General Election hereby called and to be held on the 2nd​​ of November, 2021. The ballot of submission shall contain substantially the following language:

BILL NO. 6579-21 ORDINANCE NO.​​ _______ SECTION NO. III-A-9​​ 

FOR GENERAL ELECTION IN THE CITY OF RAYTOWN, MISSOURI ON TUESDAY, NOVEMBER 2, 2021

“Shall the City of Raytown impose a local use tax at the same rate as the total

local sales tax rate, provided that if the local sales tax rate is reduced or raised by

voter approval, the local use tax rate shall also be reduced or raised by the same

action?”

¨​​ YES​​ ¨​​ NO

INSTRUCTIONS TO VOTERS

If you are in favor of the question, place an “X” in the box opposite “Yes”. If you are

opposed to the question, place an “X” in the box opposite “No”.

SECTION 4 – ADMINISTRATION. That any sales tax imposed pursuant to this ordinance shall be computed, imposed, reported, administered, collected, enforced and shall operate in all respects in accordance with the provisions of the Revised Statutes of the State of Missouri and upon such forms and under such administrative rules and regulations as may be prescribed by the Director of Revenue, any provision of this ordinance notwithstanding.

SECTION 5 – NOTIFICATION OF DIRECTOR OF REVENUE. Within ten (10) days after the approval of this ordinance by the qualified voters of Raytown, Missouri, the City Clerk shall forward to the Director of Revenue of the State of Missouri by United States Registered Mail or Certified Mail, a certified copy of this ordinance together with certifications of the election returns and accompanied by a map of the City clearly showing the boundaries thereof.

SECTION 6 – EFFECTIVE DATE OF TAX. That any sales tax imposed pursuant to this ordinance shall be effective on the first day of the applicable calendar quarter after the director of revenue receives notice of the adoption of the sales tax.

SECTION 7 – REPEAL OF ORDINANCES IN CONFLICT. All ordinances or part of ordinances in conflict with this ordinance are hereby repealed.

SECTION 8 – SEVERABILITY CLAUSE. The provisions of this ordinance are severable and if any provision hereof is declared invalid, unconstitutional or unenforceable, such determination shall not affect the validity of the remainder of this ordinance.

SECTION 9 – EFFECTIVE DATE.​​ This Ordinance shall be in full force and effect from and after the date of its passage and approval.

BILL NO. 6579-21 ORDINANCE NO.​​ _______ SECTION NO. III-A-9​​ 

BE IT REMEMBERED​​ that the above was read two times by heading only,​​ PASSED AND ADOPTED​​ by a majority of the Board of Aldermen and​​ APPROVED​​ by the Mayor of the City of Raytown, Jackson County, Missouri, 17th​​ day of August, 2021.

________________________________

Michael McDonough, Mayor

ATTEST:

____________________________

Teresa M. Henry, City Clerk

Approved as to Form:

________________________________

Jennifer M. Baird, City Attorney