County and cities discuss a proposed local-option sales tax

BY PAUL OSGERBY | JULY 29, 2014 5:00 AM

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City councilors across numerous Johnson County jurisdictions and the Board of Supervisors discussed a countywide approach to a proposed local-option sales tax at a joint meeting Monday.

“It’s the best revenue alternative we have under state law,” Iowa City City Councilor Susan Mims said.

Earlier this month, the Johnson County Board of Supervisors sent a request to all jurisdictions potentially voting on adopting a local-option sales tax to allocate 10 percent of revenue generated toward funding additions to the current courthouse.

At the meeting, councilors across the county’s communities discussed whether dedicating revenue toward updating the courthouse was monetarily beneficial for all municipalities involved.

The annex is slated to cost $30.8 million through a bond referendum, and supervisors are seeking a way to ease tax burdens.

“We understand that the courthouse isn’t just a Johnson County problem, but it’s a community problem,” Johnson County Supervisor Terrence Neuzil said. “This is an opportunity to join together.”

During its last formal meeting, the Iowa City City Council voted unanimously to amend the current 50-40-10 tax model to a 40-40-10-10 model, giving 10 percent to help fund the courthouse while taking away from property-tax relief.

Construction of the courthouse annex is slated to take four to five years, and after that the money that had been allocated for the annex would go elsewhere.

In that event, the ballot language must be clear in November as to where funding will head, said Johnson County Supervisor Janelle Rettig.

Mims said Iowa City plans to use the extra 10 percent for additional property-tax relief.

By putting to vote the tax option with the courthouse allocation in November, Coralville Mayor John Lundell said he is concerned that muddying the project with additional sales tax will confuse voters.

Neuzil said that an important educational initiative is necessary going forward with tax proposal.
Coralville City Councilor Tom Gill did not believe that the proposed tax would be feasible.

“The allotment is not fair,” he said. “It is not equitable.”

Jurisdictions will create their own models for how generated revenue would be distributed in their communities, if voters pass the tax. The allotments may vary across municipalities.

The revenue would go into one pool of money throughout the county, but distributed to each community by a state formula: 75 percent based on population and 25 percent from property tax collected.

More than 91 percent of Iowa jurisdictions have a local-option sales tax in place.

Councilors from other communities feared that Iowa City would benefit far too much from the proposed model.

However, Johnson County Auditor Travis Weipert said that it benefits smaller communities by the extra cash flow. If they do not adopt the tax, then they will miss out on money that they will eventually wish they had, he said.

North Liberty City Councilor Terry Donahue said there are several capital-funded projects currently underway in his town, and he wants to see the 10-year tax help construction projects.

The town of Swisher faces very similar problems, said Swisher Mayor Christopher Taylor.

Councilors from other smaller communities in Johnson County said they plan to head into discussions on the sales tax this week.

“This is a piece of infrastructure for the entire region,” Mims said.

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