Sales tax increase could mean no deals for business
Staff reporter
For Randy and Terry Hagen, owners of Hillsboro Ford-Mercury, Inc., there is no doubt there is a need for changes to the county jail but they're not sold on paying for it through increased sales tax at a tune of $15 million.
Like many businesses in Marion County, the car dealership is "getting by" with the current economic decline and waning population.
Terry Hagen asked Marion County Commission during the commission's public meeting Jan. 16, if the 72-bed, $15 million justice center project was the only plan of action and increasing the county sales tax, one form or another, was the only option.
"You (the commission) are assuming this is going to roll but what if it doesn't?" he asked. "The public could make a more logical decision if given all the options."
Terry Hagen continued, saying those options could include a smaller project for just a retention center and sheriff's office and/or improvements and/or expansion of the current facility.
With that, commission chairman Randy Dallke responded that the 72-bed plan was the project being considered.
Following the meeting, the businessmen expressed their concerns.
"It seemed to me the commission was honed-in on this one option for a project," Randy Hagen said. "It was like 'this or nothing'."
The brothers would like the commission to consider a smaller project, maybe a $3-$5 million jail facility, relocating the emergency dispatch office to a safer location, and determining cost estimates for improvements of district court offices.
"We know there's a need for something," Randy Hagen said. "We're the last to say we should compromise security."
"Maybe the project could be done in phases," Terry Hagen said.
During the Tuesday evening presentation, architect Dan Hall explained the facility was in three sections — court services, attorney's and sheriff's office areas, and the retention area. It was not clear if a portion or portions could be built in phases.
An alternative to a new jail or massive improvements to the current facility could be to farm-out county inmates to other jails such as the one in Chase County.
During the presentation by Marion County Sheriff Lee Becker, an estimate of nearly $200,000 per year was projected to house and transport inmates to Cottonwood Falls.
Randy Hagen took a pencil to the calculations and gave this scenario.
"Even if the cost was $250,000 per year, it's a 60-year pay-out compared to a $15 million project," he said.
The Ford-Mercury dealership has been a family-owned and operated business since 1958 when the brothers' father started the operation.
In the mid-1980's, Randy and Terry joined their father in the business and continue the family-based operation to this day.
Currently, the Ford-Mercury dealership is one of three domestic car dealerships in the county and all are located in Hillsboro. It's obvious the amount of sales tax revenue generated by the three dealerships is substantial and significantly impacts the total sales tax dollars distributed to the county.
Sales of large ticket items, such as vehicles are dependent on more than the price of the vehicle and the service.
"I got a call just the other day from a guy in Salina. The second question he asked me was 'What's your sales tax?"' Randy Hagen said. "People do compare us to other cities."
Currently, the sales tax in Hillsboro, Peabody, and Florence is 7.3 percent. It is 7.05 percent in Marion and the remaining cities are at 6.3 percent.
Neighboring cities with car dealerships are comparable to Hillsboro's current rate. Wichita's and Newton's sales taxes are 7.3 percent, and Salina is 7.05. McPherson is a little lower at 6.8 percent. If the county sales tax should increase one-half to one percent, Hillsboro car dealerships and other big-ticket retailers could lose business.
The current sales tax laws require customers to pay the higher sales tax regardless of their residency.
For instance, when a customer comes from Salina, where the sales tax is 7.05 percent, and purchases a vehicle at one of the Hillsboro dealerships, that customer has to pay the Hillsboro sales tax.
So, a higher sales tax could make or break a deal on a $20,000 or $30,000 purchase.
And like so many businesses in the county, car dealerships rely on out-of-county support.
"Probably 75 percent of our business is out-of-county," Terry Hagen said after the meeting, and added his business probably couldn't survive only on local and county residents.
As far as the Hagen brothers are concerned, this issue should not pit Hillsboro against Marion or vice versa.
"This is a county issue. Being from Hillsboro doesn't matter," Randy Hagen said.
For now, the businessmen are appreciative of their loyal customers from Marion County and father away, but worry the day may come when they could be faced with the difficult decision of staying or leaving.
