Sedalia voters will decide Aug. 4 whether to approve Proposition A, a measure that would reduce the city’s utility license tax on electricity while eliminating a long-standing tax cap for the largest electric users.
If approved, the measure would lower the city’s license tax on electric light and power companies from 5% to 4.75% of gross receipts from electricity sales within the city. At the same time, it would repeal reduced tax rates and exemptions that currently benefit certain large industrial customers.
Sedalia City Administrator Matthew Wirt said the proposal is intended to create a more uniform tax structure.
“The city collects a tax on electricity,” Wirt said. “Many cities do this, and that is currently at the rate of 5%.”
Under the current system, customers who meet certain usage requirements and are connected to a main power line qualify for a tax cap of $15,000.
“This proposition would lower the tax rate from 5% to 4.75% and remove that cap from customers,” Wirt said. “What this does is it makes the tax the same for every customer as opposed to large-use customers.”
For most residential and small commercial customers, the lower tax rate would reduce the amount of tax paid on electric service.
“The average customer that doesn’t use the 300-kilowatt threshold will pay less,” Wirt said.
Large industrial customers that currently qualify for the $15,000 cap would also pay the reduced 4.75% rate, but their tax would no longer be limited by the cap.
“The customer that pays over 300 kilowatts will no longer have that $15,000 cap,” Wirt said. “They will pay whatever that amount is based on their usage. The tax would still be less than the 5% and go to 4.75%, but it would be based on their usage.”
Wirt said the proposal simply applies the same tax calculation to all customers.
“It levels the tax to be the same for everyone as opposed to having a cap on certain users like there is now,” Wirt said.
Proposition A requires a simple majority vote for approval in the Aug. 4 election.
Chris Howell can be reached at 660-530-0146.
