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

Is passage of a local-option sales tax proof that government can work?

In Jim Prosser, Justin Shields, local-option sales tax, Mayor Kay Halloran, Rob Hogg, what worked on March 8, 2009 at 8:20 am

Listen to citizens who come to council meetings, listen to the news, listen to those outside of local government and those wanting to get in on it, and it seems nothing – nothing – works well. Government doesn’t do anything right. …

It didn’t take the Flood of 2008 to push the City Council and City Manager Jim Prosser to focus a great deal of their public comments and much of the city’s Statehouse lobbying energy on trying to figure out a way to convince the Iowa Legislature to give cities more flexibility in raising revenue.

Property taxes, the chief revenue source for Iowa cities and counties, provide most of the revenue now, and those taxes hit those who create jobs, the industrial and commercial sectors, particularly hard in Iowa.

The flood and the task of recovery from it only focused City Hall’s interest in “revenue diversification” all the more. Why can’t cities have an income surcharge or a wheel tax or a tax on alcohol and tobacco use? The nine other largest cities in Iowa joined the cause.

And lawmakers and policymakers in Des Moines spoke back. They told Cedar Rapids City Hall to use a revenue option already available to them first before asking for more. And the one chief revenue-raising source that is available is the local-option sales tax.

After all, nearly every city in Iowa has the 1-percent tax in place, and only six of Iowa’s 99 counties have county seats without the sales tax. Those six include Cedar Rapids and Iowa City.

At first, the Cedar Rapids council dithered, thinking state lawmakers might meet last fall and give some special consideration to Cedar Rapids and its flood recovery. On the city’s list of requests was to have the ability to institute a local-option sales tax without a vote by the residents.

There was no special legislative session.

By January, members of the City Council said in public that they had gotten the message from Des Moines: The city’s position would be strengthen in asking for large sums of federal and state funding if the city could show it was doing all it could to raise money locally using the taxing machinery it already had the ability to use. The council decided it would ask voters for a local-option sales tax to be used mostly for help in flood recovery.

By then, though, the state’s existing local-option sales tax law, which sets out a four-month timeline for when such a vote can be held, would not have allowed a vote before late spring.

Sen. Rob Hogg, D-Cedar Rapids, then wrote a piece of legislation designed especially for Cedar Rapids and Linn County and Iowa City/Coralville and Johnson County. The bill allowed an expedited vote on the sales tax, allowed the tax to begin to be collected immediately and did not require a metro area to vote as a block. Cedar Rapids could try to pass the tax for flood relief without worrying if Marion, Hiawatha and Robins would vote against the move and bring the tax down.

Hogg led the bill through the Iowa Legislature, the governor passed it and the City Council got the measure on the March 3 ballot.

The council assured the public that 90 percent of the funds would go to flood relief, and then in got even more specific and told the public it would be used in tandem with federal money to buy out as many as 1,300 flood-destroyed homes and rehabilitate many, many more.

The council also created an Oversight Committee to assure the public that a citizen group would help advise the council on how it spends the more than $90 million in sales-tax revenue that will be coming in over the next five years and three months.

On Tuesday, residents voted 59 percent to 41 percent to approve the sales tax.

The measure passed despite a palpable sense of frustration with the pace of flood recovery, a frustration level that Mayor Kay Halloran says she is quite aware of.

The Sunday before the tax vote, a Gazette Communications poll found the mayor’s approval rating at 20 percent and City Manager Jim Prosser’s at 29 percent, and the poll found a slight majority of residents said they had little or no confidence in the council.

In the end, with Sen. Hogg’s push in the legislature and with no little lobbying effort on the part of Halloran, council member Justin Shields and others in Des Moines, the city got a special, one-time deal out of the Statehouse for Cedar Rapids.

The city’s local elected officials — in a year in which six of nine council seats are up for grabs — then helped to make the case for the tax.

The voters this year might toss most up for election out of office. Who knows?

But each of the five people mentioned as a possible candidate for mayor –- Ron Corbett, Gary Hinzman, Scott Olson and council members Brian Fagan and Monica Vernon — supported the local-option sales tax for flood recovery.

And the tax is now in place. It will begin to be collected April 1.

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  1. Government does work well when it works properly in its place in the machine. One of the great difficulties we have is one voiced most recently by Davenport Mayor, Bill Gluba. Home rule is regularly mentioned in Des Moines, but rarely is trusted. This is something that needs to be addressed at both the local and state level.

    While I understand the desire for state legislators to exercise control over seemingly more and more local decisions, at some point they need to trust the local electorate to make decisions through petition, public comment and elections.

  2. How about publicizing the in kind donations that can be used to help meet the non federal match requirements? Properly documented volunteer hours will raise money in large chunks based on the individual volunteer’s area of expertise. Lawyers donating their time to the city for flood relief research ($100+ dollars per hour?), licensed electricians donating their time to rewire rebuilt flooded homes. ($45 per hour?)How fast will that add up, neighbor helping neighbor, Cedar Rapids citizens showing Des Moines and D.C. what we are willing to do to help ourselves. Tax is the easy way, that is the mindset in government. We need to think “outside the box” as the saying goes. Just my thoughts Rick.

  3. In this case government didn’t work very well. I voted for the local option sales tax, but I am well aware that Grand Forks, Galvaston, New Orleans didn’t need to resort to this type of revenue generation. Hmmm.. I wonder why we did?

  4. the only thing we know, is that government works well at taking more form us while delivering less. the city played from a stacked the deck with a 1 month vote, hired outside political hacks, made deceptive phone calls to elderly ladies in CR and took in huge amounts of money special interest groups who stand to profit from the city… so i guess it works, as long as that was the outcome you wanted. the only thing i don’t understand is how they got so many members of the media to turn a blind eye.

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