The Gazette covers City Hall, now a flood-damaged icon on May's Island in the Cedar River

Road warriors Fagan and Neumann: Fresh voices in the front seat for Cedar Rapids

In Brian Fagan, City Hall, Downtown District, Viewpoint on April 3, 2008 at 12:57 pm

Oprah’s on the afternoon TV, the Cubs are playing again and the work day is winding down for a lot of people.

Yet there was Cedar Rapids council member Brian Fagan, with Doug Neumann, head of the city’s Downtown District at the wheel of his Toyota Highlander, hustling late Wednesday afternoon toward the Promised Land – the Iowa Legislature in Des Moines.

Just a couple hours before, another young Cedar Rapids leader, Rep. Tyler Olson, D-Cedar Rapids, had introduced late-inning, landscape-changing legislation in the Iowa House that has the potential to bring deep relief to the property-tax bills of the state’s commercial and industrial property-tax payers. It would do that by allowing cities to pick from a mix of local revenue sources instead of relying almost exclusively on property taxes.

However, passing the legislation will require two tectonic shifts: The Statehouse would have to cede much more of its paternalistic control to local communities over the communities’ own taxing decisions; and local city councils would have to have the fortitude to actually implement some of the new taxing authority.

The idea of the new legislative proposal, though, appears mostly about shifting the local tax burden and not raising it.

And don’t mistake this: No one in the state has been bellyaching more about the need for such a shift than City Hall in Cedar Rapids.

On a cell phone somewhere between here and a dinner Wednesday evening with seven Iowa senators, Fagan said the wish is to shift Cedar Rapids’ $86-million general operating budget from its 75-percent dependence on property-tax revenue to 30 percent or 35 percent, and to replace that revenue and that tax burden with a mix of other fees and taxes.

Hold on to your hat: The proposed legislation would permit cities to impose a 1 percent local sales tax without going to voters, though Fagan thought the provision might come with a reverse referendum so citizens could force such a matter to a vote. The legislation also talks about local franchise fees on utilities; a police and fire service tax; a tobacco tax; an increase in hotel/motel taxes; and others.

Inherent in most if not all of the mix would be the inclusion of those who do not now pay local taxes to fund a city’s streets, police, fire, parks, sewer system – you can go on and on – but use some or all of those services. That means the people who come to a city to work, shop and play, but who live elsewhere and pay property taxes elsewhere, would leave some revenue behind.

That notion long has been the central premise of the existing local-option sales tax, though as state law now stands, local communities must seek local voter approval for such a tax.

The new mix of taxes also would extract revenue from other non-payers: non-profits like hospitals and colleges, for instance, though under the proposal religious institutions would be exempt. Hospitals, as an example, could pay a police and fire service tax and/or franchise fee taxes on utility use.

For anyone who followed any of the Iowa legislative races two long years ago, among promises in many of the campaigns was one to bring real property-tax relief to commercial and industrial property-tax payers. Those are the ones, as Fagan repeated Wednesday, who continue to subsidize the local tax burden for residential property owners, who pay tax on less than half the value of their property, and for all the other users of city services.

The current burden on the commercial and industrial sector matters greatly, Fagan added, because it makes Iowa and it makes Cedar Rapids and every other city in the state less competitive with other states and cities.

Wednesday was Fagan’s third trip to the Statehouse this session, and a string of other locals from the mayor to city manager to other council members to other community representatives have been down to Des Moines, too.

Fagan said lawmakers seem the most “curious” about how allowing cities to diversify their revenue sources “supports the employers who are so important to this state.”

The proposed legislation calls for allowing up to 10 “pilot” cities to experiment with the new revenue ideas. It looks, too, like cities in a metro area could participate along with one another as one pilot city.

On its face, the proposed legislation seems tax-neutral: In other words, each dollar in revenue from the new mix of taxes would replace property taxes now being paid.

But Fagan said the Cedar Rapids message to Iowa’s lawmakers is that communities also must be able to better invest in themselves to improve their quality of life. Improving that, he said, is a key to attracting the employees that employers like the AEGON USA’s and the Rockwell Collins’ of the world need.

If you can’t guess, the Downtown District’s Doug Neumann, as good at the microphone as anyone on these matters, was driving and Fagan was riding shotgun late Wednesday afternoon.

Both, along with others, have been working lawmakers hard, too, to get some special funding for downtown Cedar Rapids projects like a RiverWalk. That actually was the focus of Wednesday’s trip to the Statehouse.

No, Fagan said, he never felt like a shoe salesman when he turned up in Des Moines to pitch for Cedar Rapids.

“No, I feel like an advocate,” he said. “We come down here because we believe in our community. We believe in what we’re doing.

“… There’s none of that snake-oil stuff. We’re here on the merits. We’re here because we have the capacity to make Cedar Rapids what we know it is. You come down here as an advocate. And it’s an easy argument to make on behalf of the city.”

  1. I keep hearing that those people who use the services should pay for them. Well under that thinking then the school taxes should only be paid by those who have children in school. That would certainly lower taxes for a lot of people. Perhaps it’s time to start taxing hospitals, churches etc. I pay a storm sewer tax but we don’t have storm sewers in our neighborhood. I think it’s time to straighten this mess out

  2. To Steve: But we all went to school and benefited from public education, so we should pay for K-12 schools, just like others paid for our schooling. It’s in our best interests.
    Part of the proposed legislation would allow cities to start charging non-profits fees for police and fire service. I strongly support that, along with other fees charged people who use public services (golf courses, water, etc.) even though said non-profits will just raise their rates to its users to cover its increased costs.

  3. Different Steve, by the way. I hate to say this, but this city hasn’t a clue how to live within its means and is constantly looking for more money to maintain the bloated budgets it currently has. This is yet another example of taxing without the consent of the tax payers. I for one own property and pay property taxes, that doesn’t exempt me from fees, so in the effort to collect more money from people who don’t pay property taxes I get to pay the fees as well. Enough already! I have yet to see any tax that truly lowers property taxes, all this does is take the money from a different pocket and taxes will continue to go up. Already we have an increase coming, and if truth be known,assessed valuations of property nationwide are more than can be expected at market value. That pretty much undoes the roll back the state makes on property taxes after the assessors do their creative evaluation of property. If your house is “valued” at X plus, and the market value if you sold it is only X, then the roll back leaves you with being taxed at close to 100% of true market value and there is no roll back. Stop with all the shinanigans already. Cedar Rapids needs to learn to live within its means, and that means quit buying up property to take it off the tax rolls at our expense. If the country goes into recession no one is going to be able to pay all those fees and you’ll be taxing the rest of us out of our homes.

  4. Other Steve, I totally agree with Steve. We are the “City of 500 Taxes”. Fees are just another word for taxes! Our Government officas are actually dairy farmers. They’re milking the taxpayers for everything they can.

  5. If the taxes are so high, why do we keep adding population? Maybe we aren’t so bad after all…I mean, you’re still here, right?

  6. As Mayor and President of the Iowa League of Cities I worked with the Iowa Association of Counties and cities to put together a suggestive plan to reorganize out out of date property tax system. It had a few bumps in it to work out but the weak kneed legislature did not want to open a can of worms. Afraid to tick off the lobbying groups. That lack of action has put Cedar Rapids in a world of hurt now that we are facing millions in flood damage – forcing one option stick the property taxes. We need leadership and public pressure to get the Governor to call a special session to offer cities funding options or we will face many dark days of financial burden. Courage and Leadership from City Hall is needed!!!

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