During the exodus of businesses this past year in Hutchinson, some blamed high sales and property taxes.

But just how high are those taxes in Hutchinson?

We did the research and the math.

Sales tax

Sixty-five of the 647 cities and towns in Kansas have a higher sales tax than Hutchinson, according to the Kansas Department of Revenue. Another 219 cities and towns, or more than one-third, are within a six-tenths of Hutchinson’s 9.1 cents per dollar.

Readers have told the News on social media they travel to Wichita to cash in on a lower sales tax rate; others said they commute for the more extensive selection of shopping and the big-city experience. For some, it's a combination of both.

 

One is obvious: Wichita is a bigger city with more selection.

But to travel just to save money - that just doesn't add up.

Consider:


A 100-mile round trip at 25 mpg, with a conservative $2 a gallon for gas, would cost $8 in fuel alone. Add in Wichita’s 7.5 percent sales tax, and it would take a $500 shopping trip just to break even.
For a 125-mile round trip to Salina, prospective shoppers start $10 in the hole. At Salina’s 8.75 percent sales tax, they would need to spend more than $2,000 to break even.
Add in the total cost of operating a vehicle, which a AAA study this past year estimated at 56 cents a mile, and it would take spending $3,500 in Wichita and more than $18,000 in Salina to break even with Hutchinson's sales tax. The AAA figure includes depreciation, maintanence and repairs and fuel.

Hutchinson’s sales tax, however, is higher than the state average of 8.1 percent, not including special taxing districts. Hutchinson has two: in each, sales taxes are 11.1 percent. That is higher than the state average of 10.1 percent for taxing districts.

Property tax

“Reno County probably shouldn’t grumble much," about high property taxes, said Roger Hamm, the deputy director of property evaluation at the KDOR.

Hamm said the effective tax rate in urban areas is the best county-by-county comparison of property taxes.

This tax rate uses a formula and spits out a percent property owners can expect to pay. The urban area is an average of property levies in cities across each county.

Hamm provided a 2016 county-by-county average, the latest year available, with those rates.

Reno County’s 1.87 percent tax on a residential property is the 45th highest of 105 counties. The 4.08 percent tax on commercial property is also the 45th highest.

Based on those amounts, the owner of a $100,000 home would see an annual bill of $1,870. A commercial property owner with a $100,000 property could expect a bill of $4,080.

Municipalities also can offer different incentives for new businesses. Those are done on a case-by-case basis and therefore would be impossible to compare in one county to the next, Hamm said.

Other fees

County Commissioner Dan Deming pointed to Hutchinson’s stormwater utility fees as another factor in the decline of businesses, in a column he wrote for the News on Jan. 31.

The city increased the fee in 2016, raising annual revenue from roughly $550,000 to more than $2 million. The money goes toward improving areas prone to flooding.

The monthly fee for residents is a flat rate of $4.75, comparable to other cities with flat fees.

It’s more difficult to make a comparison on the commercial side. Commercial rates in Hutchinson and Wichita, for example, are based on square footage.

The commercial rate for Hutchinson is $4.75 per 3,120 square feet.

Wichita charges $2 per 2,139 square feet, which translates to $2.92 per 3,120 square feet.

Declining sales tax revenue

Since 2010, the City of Hutchinson saw an increase in sales tax revenue each year until 2016, when it peaked at $9.88 million.

City Manager John Deardoff is optimistic that 2017’s revenue of $9.46 million won’t be the start of a downward trend, but will be what the city currently can expect. Still, the city dipped into reserves the past two years, leaving city officials with difficult choices in upcoming budgets.

“Obviously, we are not going to be able to do every project everyone wants or buy replacement of equipment we need,” Deardoff said.

“Certainly, we have to look at our staffing," he said of future budgets. "It’s 65 to 70 percent of our budget.”