The Douglas County Food Policy Council has joined the long-standing fight to eliminate sales tax on groceries, and it wants local governments to back it up.
The initiative comes from the council’s Food System Plan, which relied on local focus groups and community forums.
“I think one of the things we heard most as we did different listening sessions across the county was that affordability of healthy food was a big concern,” said Helen Schnoes, Douglas County sustainability and food systems planner and liaison to the council.
However, full support from local governments likely won’t come easily. Local leaders say the issue is complicated, and completely eliminating sales tax on groceries would become a financial burden for local governments.
“We can’t talk about that until we talk about lost revenue and how that would impact our budget and how we would work around that,” Mayor Leslie Soden said. “In reality, that would be detrimental to our budget.”
The council is a joint city-county board, and one of the plan’s five goals is for the community to foster an equitable food system. The goal calls for expansion of city- and county-led initiatives to make food more affordable and has a policy statement to “reduce and eliminate” the sales tax on groceries. But state law, as well as state and local governments' reliance on the revenue, present significant hurdles.
The Food System Plan will be part of the update to the Lawrence-Douglas County comprehensive plan and is the first time a food policy component has been included in the comprehensive plan.
About 17 percent of people living in Douglas County are “food insecure,” meaning they have limited or uncertain access to adequate food, according to the Douglas County Community Health Assessment. That rate is worse for children, with 1 in 5 living in households that are food insecure.
In Lawrence, residents pay 9.05 percent sales tax on purchases, including groceries. For instance, for every $500 spent on groceries, people pay about $45 in state and local sales tax.
Food Policy Council member Ashley Jones-Wisner said the tax is incredibly inequitable and she'd like to see the state portion, currently 6.5 percent, reduced or eliminated.
“It’s such a high sales tax rate and it disproportionately impacts low-income individuals,” Jones-Wisner said.
Schnoes said the sales tax goal is long term and, at this point, “very nascent.” She said the council has a subcommittee that will look at the topic in more detail to determine potential strategies to reduce the sales tax rate for groceries.
The issue certainly goes beyond local politics. The Kansas Legislature controls the state sales tax rate and what can be exempted from sales tax.
Kansas is one of only 13 states in the U.S. that charge any sales tax on groceries, according to a 2016 report from the Tax Foundation. Of those, six states charge sales tax on groceries but at a significantly reduced rate. Other states that charge the full rate are Alabama, Hawaii, Idaho, Mississippi, Oklahoma and South Dakota.
Though the state’s policy of taxing groceries has long been criticized, local city and county governments do not have authority to deviate. According to state statute, local governments' sales tax exemptions must be identical to state exemptions.
Local governments also cannot exempt groceries from their local sales tax, according to Kansas Department of Revenue Spokeswoman Rachel Whitten.
Jones-Wisner, who is also the state policy director for KC Healthy Kids, said the council wants the City Commission and Douglas County Commission to join those asking the state Legislature for a reduction in the state sales tax on groceries.
“Food isn’t a luxury item, and having our policymakers stand up and say they would like to see the state reduce sales tax on food I think is important," Jones-Wisner said.
Jones-Wisner said KC Healthy Kids has been advocating that Kansas reduce or eliminate the state sales tax on groceries for the past three years.
Because cities and counties generally must follow the same sales tax exemptions as the state under current law, getting local governments behind the effort could prove difficult. It would likely be hard for local governments to advocate that the state stop taxing groceries but allow cities and counties to continue to do so.
Lawrence residents pay 9.05 percent sales tax, which includes the 6.5 percent state sales tax, 1 percent county sales tax and 1.55 percent city sales tax.
Local governments have not historically been advocates for eliminating sales taxes on food, as their budgets rely on the sales tax dollars generated from grocery sales. In 2016, the city collected more than $5 million in revenue from local sales tax charged on groceries, according to sales tax reports. That figures represents about 13 percent of the city’s sales tax revenue and about 2.5 percent of the city’s overall revenue for the year. The Journal-World was not immediately able to confirm those totals for the county.
The plan specifically notes that “any local action to remove or reduce sales tax on food must identify an alternative revenue stream.” Douglas County Commissioner Nancy Thellman said that was a key element to include.
“I think it’s a noble impulse and one that’s worth pursuing but with a good dose of reality,” Thellman said. “Whenever you subtract one kind of revenue, it leaves a hole in the budget that has to be filled or services have to be taken away to make up for the lost revenue.”
The city releases a list of legislative priorities annually, and this year’s list states that the city is against any increase in the state sales tax rate but does not make a statement about exempting groceries.
Soden also said talking about reducing or eliminating sales tax on groceries is a valid conversation to have, but she said to eliminate the local sales tax on groceries would require a practical plan for how it could be accomplished. She said right now the issue is not part of the city’s plans.
“I think it’s a valid topic to have a general conversation about, but we have our strategic plan and we already have initiatives that we are working on,” Soden said. “I’m a little reluctant to add things to that list.”
The Food System Plan’s other goals include supporting local agriculture, conserving natural resources and eliminating food deserts. The plan will be incorporated into the Lawrence-Douglas County Comprehensive Plan. The first draft of the comprehensive plan update was released earlier this year and review is ongoing.
Thellman said she is pleased that the Food Policy Council is willing to take on big ideas and big issues such as sales tax on groceries.
“They are about policy and they do serious work, and so I’m glad that they are taking this on and being thoughtful about it,” Thellman said. “I think it will be a long and beneficial conversation.”