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Lancaster County Capital Project Sales Tax Commission members faced a new hurdle in their quest to craft a November ballot question to reauthorize the county’s 1 cent sales tax for capital projects – a 20 percent decrease in potential revenue.
The commission learned of the issue, related to a change in state law prohibiting local sales tax on some foods, during its Thursday, July 31, meeting.
The commission met to rework an earlier proposal at the behest of Lancaster County Council.
Despite the sobering news, commissioners still managed to craft a proposal that retains a project list with roads, emergency radios, a main library and a sheriff’s office drug evidence testing lab.
“I apologize sincerely,” County Attorney Frannie Heizer said in briefing commissioners about the Wednesday, July 30, discovery.
“We were doing our final double check of details and discovered we had allowed you to use revenue from unprepared food.”
Heizer said a change in state law governing local sales and use taxes, effective June 3, 2009, prohibits the tax from being levied on unprepared food such as uncooked meats, fresh vegetables and canned foods.
Lancaster County’s current sales tax, approved by voters in 2008 to pay for the new county courthouse, was not affected by the change and is still levied on such items.
Heizer said the estimated loss of revenue from the change amounts to about 20 percent of the sales tax’s potential revenue, or roughly $9.4 million.
The loss reduced the estimated revenue sales tax commissioners had to work with in crafting a new proposal from a high of $45.9 million to $37.5 million.
Commissioners built their previous proposal, presented to County Council Monday, July 28, on a conservative $44 million revenue estimate.
Council approved second reading of the proposed ballot question, but sent it back for a third time asking commissioners to include more county and state secondary roads.
“We have some significant changes here to digest,” sales tax commission Chairman Larry Durham said in kicking off Thursday’s consideration.
What’s in it
After nearly two and a half hours of discussion, commissioners agreed to a proposal that necessarily reduced road funding, but included a refined list of roads.
The new road list does away with the many small Act 114 state road patching projects in the former proposal, keeps the larger projects, and adds several state secondary road projects not included in the former proposal.
The new proposal also ensures both county and state road projects are more evenly spread across the county and prioritizes county road projects in each council district according to severity.
“I think there was concern that certain parts of the county would not get as much as others,” Commissioner Ted Hoover said. “Even the amount of money for roads on this list is nearly identical (for each district).”
Commissioners decided to fund $12 million of the $27.8 million list of state and county road projects, roughly half the projects on the lists, with bonds so work on them can begin as soon as possible, should voters approve.
The new proposal also includes $7.5 million for a new digital radio system for the county’s emergency service agencies, $4.5 million of it through bonds.
The proposal includes $238,000 for a sheriff’s office forensic drug testing lab, and $8 million for a new Lancaster County Library System main library branch.
Both projects, along with the remaining funding for the radio and road projects, would be funded later in the seven-year life of the tax as funding becomes available, a funding method known as “Pay-As-You-Go” (PAYGO).
County financial consultants will figure the exact amount of the remaining road funding before Aug. 11 when sales tax commissioners present the proposal to County Council.
Council must approve third and final reading of an ordinance to send the ballot question to the state Elections Commission by Aug. 15, otherwise the effort will die procedurally.
With the question’s precarious status, Durham said he would be on “pins and needles” waiting for Council’s final decision but felt confident the plan was a good one.
“I feel very optimistic. I think we’re going to get every project on the list completed,” Durham said. “I still think, in light of the 20 percent revenue reduction, we still have a good proposal for council to review.”
Contact reporter Reece Murphy at (803) 283-1151