Local-option tax estimates revised down

BY SHANE ERSLAND | MAY 14, 2009 7:32 AM

The local-option sales tax would have garnered millions of dollars more for flood mitigation if it had passed in Coralville, but some of the area’s business owners say they’re glad customers will not have to pay extra taxes.

A 1-cent tax increase will be assessed to nine Johnson County areas that voted for it, starting July 1 and in effect until June 30, 2013. Coralville, North Liberty, and unincorporated Johnson County voted against the measure.

The tax funds will be distributed among the communities in which it passed, based on a formula that includes the various jurisdictions’ population and amount their citizens pay in property taxes.

Jurisdictions that voted against the measure won’t receive any funds.

If Coralville residents had voted to implement the tax, the city would have received around $6.25 million to spend on flood-related projects, said Johnson County Auditor Tom Slockett.

Scott Cray, owner of Hawkeye Audio Video in Coralville, said the 1-cent sales tax would have increased his customers’ costs, especially when buying larger items.

“We’re pleased with the outcome,” Cray said. “It’s not really a penny when you’re selling items for $1,000.”

Officials had estimated that the sales tax would collect around $17.4 million, assuming it passed in all 13 Johnson County areas. With Coralville and North Liberty voting against the measure, new estimates by the Iowa Department of Revenue are around $9.9 million. Iowa City, Coralville, and North Liberty were the highest earning Johnson County areas in sales last year, with Coralville bringing in $625 million, and North Liberty accumulating around $61 million, said Slockett.

Mary Sundblad, owner of Stuff, Etc. in Coralville, said if the sales tax would have been implemented in her city, it would have driven consumers to shop outside of Johnson County.

“We want to keep our people shopping local, and the only way to do that is to keep sales tax low,” said Sundblad, noting she voted against the tax.

The sales-tax funds will pay for flood relief in Iowa City and community projects in other Johnson County areas that voted in favor of it.

“We think supporting flood relief is a good thing, but we’re pleased our customers don’t have to be the ones paying for it,” Cray said.

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