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Posts Tagged ‘local-option sales tax’

Davenport’s Gluba says what Cedar Rapids City Hall says: city leaders are at least as smart as state legislators and cities need more financial freedom

In City Hall on February 27, 2009 at 10:52 am

Davenport Mayor Bill Gluba served in the Iowa Statehouse back in the 1970s, and this week he was recalling how back then was the time when Iowa cities secured “home rule.” Back then, Gluba, a Democrat, was among state lawmakers who also pushed to give Iowa cities what he called “financial home rule.”

At the time, though, state lawmakers wanted to keep a tight hold on the freedom local jurisdictions had to decide how to raise money to pay for local government, Gluba said. That’s still the case, he added.

“The people on the Cedar Rapids City Council, the mayor, the council members, they’re all as intelligent as anybody in Des Moines. I know them all in Des Moines.

“The elected officials in Cedar Rapids are responsible, caring, concerned citizens who all have the best interest at heart of the people of Cedar Rapids. And so we should have financial home rule across the board and let them make their own decisions.”

Don’t be misled: Gluba was really talking about himself and his own colleagues on the Davenport City Council as much as he was anybody at Cedar Rapids’ City Hall.

He was simply making the point that Cedar Rapids’ city leaders are in the same pickle as he thinks Davenport’s city leaders and many other city leaders are across Iowa.

He was making the point that the Cedar Rapids City Council and City Manager Jim Prosser have been trying to make for more than a year. That is, cities in Iowa are too dependent on property taxes to pay their bills, and that the Iowa Legislature needs to give cities freedom to raise revenue in other ways.

Cedar Rapids City Council members call it “revenue diversification.”

One of simplest ways to accomplish that might be to let cities charge an income-tax surcharge just like school districts in Iowa now can do.

But one thing state law now allows cities to do to diversify revenue is to pass a local-option sales tax.

Only six county-seat cities in all of Iowa – Iowa has 99 counties – do not have a local-option sales tax in place. Those are Cedar Rapids, Iowa City, Des Moines, Adel, Indianola and Ida Grove. Ida Grove puts it in place this summer.’

“I really can’t believe Cedar Rapids doesn’t have it,” Gluba says of the sales tax.

Cedar Rapids and other Linn County jurisdictions vote on the tax on March 3; Iowa City and other Johnson County jurisdictions on May 5.


Davenport’s mayor: Tuesday votes on local-option sales tax in Cedar Rapids and Davenport could help both cities’ work forces and help keep both from becoming second rate

In City Hall, Floods on February 27, 2009 at 6:44 am

Davenport Mayor Bill Gluba is a proponent of the 1-percent local-option sales tax that his city has had in place since 1988.

Sixty percent of the revenue goes there has gone for property-tax relief and 40 percent for infrastructure and capital improvement projects. It’s bringing in $15 million for Davenport a year.

Why Cedar Rapids, Iowa’s second largest city, hasn’t embraced the tax is a mystery to him, Gluba says. For Davenport, Iowa’s third largest city, the tax has been little short of a Godsend, he says.

In Gluba’s view, Cedar Rapids surely needs all the extra revenue it can get as it works to recover from the June 2008 flood.

“I really can’t believe Cedar Rapids doesn’t have it,” says Gluba of the local sales tax. “It’s one of the most progressive communities in the state. I hope they will listen to the leadership of your mayor and others who know the need to do this.

“You were devastated in the flood. … Do you want to become a second-rate city?”

At the same time, not all is well in Davenport even with the local-option sales tax.

Gluba is candid: Davenport’s population is stagnant and it’s getting older and poorer. Those are the facts, he says.

With that in mind, Davenport is sending its voters to the polls on Tuesday, too. Only Davenport is seeking to change the way the city distributes the $15 million in revenue the tax provides each year.

At the heart of the change is an issue that is one that Cedar Rapids leaders have been talking about and worrying about for a few years. That is, how does a city keep and attract talented workers and employers for the future? Cedar Rapids council members and community groups supporting the local-option tax talk about the need keep and attract a quality work force as part of the reason to rebuild the city better than ever.

In Davenport, community leaders think “Davenport Promise” is the answer and they are asking voters to steer up to 30 percent of the city’s annual local-option sales tax revenue to fund the program.

Davenport Promise’s promise is to pay the tuition of every Davenport student when they go to college or a vocational school. For students who enter the military, the program will provide $7,500 in mortgage assistance should the veteran return to live in Davenport.

The program is based on a privately funded one in Kalamazoo, Mich., which Gluba says has accomplished what Davenport is looking to do. It has attracted residents, increased the number of public school children, spurred home sales, increased home prices and helped the commercial and industrial sector.

Gluba calls the Davenport Promise an economic development tool. He says it is designed to attract talented workers to live in Davenport, have them raise their children in Davenport and help prepare their children for an education after high school.

Gluba says cities in Iowa provide incentives to businesses all the time to attract or keep them. He says Davenport Promise goes a step farther and looks to use incentives to attract the workers and the families. The goal is for everyone to know that Davenport is “The Education Community,” he says.

Davenport Promise, he adds, isn’t without organized opponents.

What is surprising, perhaps, is that a vote on such a fascinating idea is coming on Tuesday in a city as close as Davenport with little or no mention in Cedar Rapids. It’s an indication that Cedar Rapids is focused on its flood and recovering from it.

Pass the tax and get on with that job, Davenport’s Gluba encourages Cedar Rapids.

Whether you do or don’t, he adds, just know Davenport has Cedar Rapids in mind.

“Davenport, we’re trying to surpass Cedar Rapids,” Gluba says. “… If you don’t get on about it, you’re going to be the third largest city in the state rather than the second.”

Council ready to take yet another step to assure the distrustful

In City Hall, Floods, Justin Shields on February 25, 2009 at 9:22 am

It looks like the City Council is sufficiently eager for voters to pass a local-option sales tax to help with flood recovery that the council will bite its collective tongue and again try to assure people who think the council can’t be trusted to spend the tax money correctly.

At its meeting this evening, the City Council will approve a resolution that specifies that 90 percent of the revenue from a local-option sales tax will be used “for the buyout, rehabilitation and relocation of flood-damaged housing.”

The tax is expected to generate about $18 million a year for the city in each of five years and three months that the tax will be in place should voters approve it on March 3.

Earlier, the council voted to use 90 percent of the tax revenue for flood relief and 10 percent for property-tax relief. The council-approve language on next Tuesday’s ballot reflects that earlier vote. Of the 90-percent of the tax revenue to be used for flood relief, the ballot language says the revenue will be used “for the acquisition and rehabilitation of flood damaged housing caused by the flooding of 2008, and matching funds for federal dollars to assist with flood recovery or flood protection.”

The language was designed to give the council some flexibility to use the money in the unlikely event that federal dollars, for instance, take care of more of the housing relief than the council now anticipates it will.

However, council critics were sure that meant the council would use the money in ways other than flood relief.

At last week’s council meeting, council member Justin Shields fumed about public distrust in the council and its intentions for the sales-tax revenue. At Shields’ insistence, the council, from member to member, assured that the money would be used to address the city’s couple-hundred million dollars in flood-damaged housing relief.

City Hall, then, issued a press release on Friday.

Earlier, the council voted to create a nine-member citizen oversight committee to oversee how sales-tax revenue would be spent.

Still people were questioning the council.

So tonight the council will pass a new resolution.

At last check, no one is calling for oversight committees and new resolutions to be passed by the Linn County Board of Supervisors or the city of Marion, for instance, both of which will also bring in plenty of tax-revenue should the ballot measure pass in those cities on Tuesday.

An unusual event: Recent state legislator Staed and even Downtown District’s Dusek stand up in public and praise City Council

In City Hall, Floods on February 25, 2009 at 8:30 am

Recent state legislator Art Staed of Cedar Rapids stood out in a crowd the other night for saying a seldom heard thing: That the mayor and City Council have been doing a great job.

It seems worth noting, because at events where the public gets a chance to speak –- week in, week out at City Council meetings, for instance -– the sentiment often is that the council and mayor are a bunch of bums.

“I don’t know where you’ve been,” Staed told a crowd of about 100 who had turned out Monday evening at a forum sponsored by The Gazette on the local-option sales tax.

He said the mayor and council had been “working their tails off for this city” ever since the flood eight months ago.

Staed had sat on his hands for a time, listening to others in the crowd beat up on City Hall and say they didn’t trust the City Council to spend the $18 million or so in the city’s share of annual sales-tax revenue responsibly.

Then he popped up to speak.

Staed said he couldn’t understand how people could show up at a public forum and essentially call elected city leaders a bunch of “liars.”

He said it was vital for the city to pass the sales tax to show the federal and state governments that the city is “doing something for ourselves.”

One suggestion had been that getting the Iowa Legislature to pass an income-tax surcharge for cities like school district can do would make for a less-regressive tax than a sales tax.

“That’s crazy, sitting around waiting for the Iowa Legislature to pass an income tax (surcharge),” Staed said.

Earlier at the forum, Peter Fisher, a University of Iowa professor or urban and regional planning and a researcher for the liberal Iowa Public Policy Project, said the regressive feature of the sales tax is really erased in the Cedar Rapids instance because so much of the tax is targeted for flood-damaged homes, nearly all of which had been owned by those with modest incomes. The tax also will go directly to creating jobs to renovate and replace the housing, Fisher said.

Fisher said he didn’t think the Iowa Legislature was likely to pass the income tax surcharge.

After Staed sat down the other night, Jon Dusek, president of Armstrong Development Co. and board member of the Downtown District, got up and agreed that the City Council had been working hard. At the same time, Dusek noted that he had sent the council a recent letter urging them not to raise property taxes by 14 percent as the city manager’s preliminary budget had proposed. The council has since sent the budget back for fixing.

Jeff Schott, former long-time Marion city manager and now program director at the University of Iowa’s Institute of Public Affairs, joined Fisher and others on the Monday evening panel. Schott noted that many Iowa cities have turned to a local-option sales tax because of a lack of ways to raise revenue other than property taxes.

The Gazette’s forum on the local-option sales tax issue brought out a nice crowd of 100 or so on a cold Monday night.

Those in attendance included people who see the tax as vital to help in the city of Cedar Rapids’ flood recovery and those who hate the tax.

Every jurisdiction in the county is voting on the tax on March 3 except four of them that already have the tax in place: Bertram, Central City, Coggon and Prairieburg.

Monday’s event actually was held over the Cedar Rapids border in Marion, though all the questions were about Cedar Rapids.

The crowd was sufficiently diverse that it drew healthy applause at some points from the tax haters and from the tax supporters.

A few words in new law on local-option sales tax hurt unincorporated Linn, help Marion, change little for Cedar Rapids

In City Hall, Linn County government, Marion on February 23, 2009 at 2:50 pm

There is a small, little-noticed line in a special piece of state legislation, legislation that has permitted a fast track to the March 3 vote on a 1-percent local-option sales tax.

Should the sales tax pass throughout the county, that line in the new law will have a notable, negative dollar impact on the Linn County Board of Supervisors and the unincorporated area of Linn County for which it is responsible. And at the same time, the law change will have a nice positive impact for the city of Marion.

Other jurisdictions in the county will notice little difference.

The reason for the notable change in expected sales-tax revenue for the Linn supervisors and the city of Marion is a change in the data used in the formula dictating how the tax is dispensed within a county.

The formula is based on two things: each jurisdiction’s percentage of total property-tax revenue in the county and each jurisdiction’s percentage of total population in the county. One quarter of the weight of the formula is given to the former, three quarters to the latter.

State law has based the property-tax revenue on taxes collected in the years from 1983-1985. Every local-option sales tax in the state – only six county seat cities don’t have the tax — has its distribution formula based on that three-year period in the 1980s.

However, that three-year period of property-tax revenue was changed to 2005-2007 in the recent special legislation, steered through the Statehouse by Sen. Rob Hogg, D-Cedar Rapids.

Hogg on Monday said the intent of changing the years in the formula was to accurately reflect how communities have developed in the last 25 years.

In Linn County, what changed between 1983-85 and 2005-07 is that the metro-area cities have grown into parts of what had been unincorporated Linn County, and as a result, the relative property-tax revenue has shifted a bit to the city from the country.

This is why unincorporated Linn County fares less well in the new computation of the distribution formula and why fast-growing Marion has fared better.

The 1-percent local-option sales tax is expected to bring in about $30 million a year in all of Linn County if every jurisdiction in the county passes the tax on March 3.

If that happens, the Linn County Board of Supervisors and unincorporated Linn County will receive an estimated $4,899,000 a year. However, that is an amount $483,000 a year less than it would have been under the formula’s old computation. In total, that’s $2,535,750 less over the course of five years and three months. In that time, the tax will raise $25,719,750 for the unincorporated area of the county.

For Marion, the change will be in the other direction. Over five years and three months, the tax is expected to bring in $19,719,000 for Marion, an amount that is $306,000 a year more or $1,606,500 more over the life of the tax than it would have been using the earlier property-tax years in the distribution formula.

The city of Cedar Rapids now will receive 59.9 percent of the tax revenue – about $18 million — in the new formula and it would have received 59.79 percent if the 1980s property-tax revenue had been used.

With the new formula, unincorporated Linn County will receive 16.33 percent of the tax revenue, but it would have received 17.94 percent using the 1980s property-tax revenue figures, according to the Iowa Department of Revenue.

Marion now will obtain 12.52 percent of the revenue, up from 11.5 percent under the old formula while Hiawatha will get 3.04 percent up from 2.74 percent.

SEE this chart to see how each Linn jurisdiction will fare now and each would have fared under the old arrangement.

Sen. Hogg said the city of Coralville, in particular, pushed for the change of the years used in the formula as a way to take into account the changes in development in the last 25 years. Johnson County jurisdictions vote on a sales tax in May.

Distrust of City Hall seems part of the subtext of approaching local-option sales tax vote

In City Hall, Floods, Justin Shields on February 21, 2009 at 7:52 am

It’s probably fair to say it couldn’t be otherwise. That is, a distrust of the City Council and City Hall in general.

After all, the city is trying to come back from a multibillion-dollar disaster in the middle of a near national depression in a nation that has seen dozens of other natural disasters in the last year. Everybody and his or her brother is competing for vital federal disaster money.

Making it all better yesterday just is an impossible task.

Even so, a level of distrust of City Hall has become quite apparent as residents in the city prepare for a March 3 vote on a 1-percent local option sales tax.

All the major players in the city are on board behind the tax, the Cedar Rapids Area Chamber of Commerce, Hawkeye Labor Council, Downtown District, Next Generation Commission, the chairman of the Economic Planning and Redevelopment Corp. and on and on.

There’s also a well-represented coalition of people and groups out campaigning for passage of the tax as something called Vote YES! For Our Neighbors.

The supporters see the tax as vital local help for the city’s flood recovery, and they passage as sending a vital signal to state and federal lawmakers that the city is doing all it can itself to contribute to flood recovery.

Nonetheless, the Chamber of Commerce’s endorsement of the sales tax came with a caveat: The Chamber insisted on the creation of a community oversight committee to guide how City Hall would spend the tax revenue. Vote YES! For Our Neighbors did, too.

The suggestion had the feel that, without such oversight, City Hall might not do the right thing and, without it, City Hall might actually louse up the tax’s chances for passage.

The City Council enthusiastically created such an oversight committee, which will be in place by April 1, when the tax begins to be collected if it is passed March 3.

But the distrust doesn’t end there.

Just this past week, representatives of Vote YES? For Our Neighbors spoke to The Gazette’s editorial board as they, no doubt, have been speaking to other groups around the community. The representatives said they still wanted more from the City Council. They wanted the council to pass a binding resolution that specifically promised that all the sales-tax revenue intended for flood relief would be spent for flood relief, and specifically for the purchase and rehabilitation of flood-damaged housing.

No matter, that the City Council’s voice was featured in a front-page story in The Gazette on Monday in which members promised to spend the revenue intended for flood relief on flood-damaged housing. No matter, that the council, member after member, declared the same thing at its meeting on Wednesday evening. No matter that the council-approved language on the March ballot pretty explicitly says as much.

A distrust expressed during the public comment period of the Wednesday council meeting prompted council member Justin Shields to anger. He said he couldn’t understand how the council could make its message any clearer.

That it needed to make it clearer became apparent on Friday when City Hall’s communications operation issued a press release based on the council’s Wednesday meeting with the headline “City Council Confirms Housing Buyouts & Rehab Priority.”

The news release pointed out the precise language the council on Feb. 3 approved for the March 3 ballot. It states that the tax revenue will be spent this way:

— 10 percent for property tax relief.
— 90 percent for the acquisition and rehabilitation of flood damaged housing caused by the flood of 2008, and matching funds for federal flood dollars to assist with flood recovery or flood protection.

Nonetheless, look for the council to create a council resolution next week that it can vote on anyway.

Interestingly, no one fought harder than council members to get a change in Iowa law so that the council could set a local-option sales tax vote in expedited fashion on March 3 and so that the tax could begin to be collected in expedited fashion on April 1. The special state legislation also does not tie Cedar Rapids’ vote to the block of metro cities, which is usually the case in local-option votes.

Shields fumes over what he says are sales-tax vote distortions; Shey quotes Mark Twain

In City Hall, Justin Shields, Pat Shey on February 18, 2009 at 9:57 pm

Council meetings begin with comments from the public, and last night a couple of citizens suggested that the council would use the $18 million in annual revenue from a local-option sales tax to balance its budget, not for flood relief.

Council member Justin Shields, of late, has had a short fuse for such misinformation because he says the city needs the sales-tax revenue to get back on its feet after the flood.

Shields tried to set the record straight, saying it would be a “crying shame” if the March 3 vote on a 1-percent local-option sales tax went down to defeat at the hands of statements from people who weren’t telling the truth.

Shields then went around the council table and asked each of his council colleagues to state what the council intended to do with 90 percent of the sales-tax revenue. Ten percent goes to property-tax relief.

To a person, each council member said the 90-percent of the money would go for flood-damaged housing, to buy it out or repair what can be fixed or to pay local matches for federal dollars used for buyouts or repair.

“All for housing, all the time,” council member Monica Vernon said.

When council member Pat Shey’s turn came to talk, Shey took particular offense to a citizen’s suggestion that the council spent only 25 minutes at a meeting deciding on the ballot language for the March 3 local-option tax vote. The meeting in question might have lasted 25 minutes, but Shey said he and his council colleagues have been thinking about flood recovery since June 17.

Shey, too, was concerned about misinformation and he paraphrased a piece of Mark Twain wisdom to make the point: “A rumor can be halfway around the world before the truth gets its shoes on.”

No to local-option sales tax vote March 3, says group called Cedar Rapids Tea Party

In City Hall, Uncategorized on February 12, 2009 at 3:30 pm

There has been quite an outpouring of organized support as the March 3 vote approaches on a 1-percent local-option sales tax.

The City Council supports it. There’s a local grass-roots group, Vote YES! For Our Neighbors. The Chamber of Commerce, Downtown District, Hawkeye Labor Council, the Next Generation Commission, the Convention and Visitors Bureau and on and on.

That surely doesn’t mean there aren’t opponents.

Tim Pugh, who identifies himself as a 32-year-old small business owner, is leading a group that calls itself Cedar Rapids Tea Party.

Pugh says he has about 75 people who have signed for the cause to date.

He handed out a flier at the Wednesday evening council meeting: “Now is NOT the time to get LOST,” the flier reads. LOST, of course, is local-option sales tax.

The 1-percent tax is expected to raise between $18 million and $24 million a year for five years and three months, with 90 percent going for flood relief and 10 percent for property tax relief. Cedar Rapids Tea Party says the portion going to property-tax relief is “pennies for Homeowners.”

The group wants the city to cut waste in its budget, not raise taxes. The group says the city already has “squandered” flood relief funds.

Carol Martin, the well-known critic of City Hall spending, also is organizing a network of sales-tax opponents separate from Tim Pugh’s group.

Two efforts focused on the same message is a good thing, Martin said Thursday.

Council not using L-word or F-word, but it seems to sense: big hike in property taxes might louse up sales tax

In City Hall, Kris Gulick, Monica Vernon, Pat Shey on February 8, 2009 at 9:11 pm

At last Thursday evening’s budget meeting, City Council member Pat Shey put it this way: “We’re going to ask a lot from citizens this year.”

Shey mentioned higher fees: The proposed new budget includes a 14-percent hike in the city utility bill — for water, waste water, storm sewer and garbage services; and the proposed budget includes a brand-new 2-percent fee on electric and natural gas bills.

And then Shey mentioned the 1-percent local-option sales tax, which the council is asking voters to approve on March 3.

With the fees and the sales tax, he didn’t think the public would take kindly to a 14-percent boost in property taxes at the same time.

That level of property-tax increase was what the city manager had proposed for the fiscal year beginning July 1.

But Shey said, maybe the question was this: “What can we do to trim services.”

He wasn’t alone among council members, who sent Casey Drew, the city’s finance director, City Manager Jim Prosser and the city government’s department heads back to the drawing board. In short, the message was this: go find some place to cut.

One inference from what Shey had said is the council has the ability to louse up passage of the local-option sales tax if it doesn’t take it easy on property taxes, which is the principal revenue source for local governments in Iowa.

And the council – and a host of local groups from the Cedar Rapids Area Chamber of Commerce to Hawkeye Labor Council – doesn’t want to louse up the prospects for the sales tax, the revenue from which they say the city needs as it works to recover from the 2008 flood.

The sales tax will raise between $18 million and $23 million a year for Cedar Rapids for five years and three months.

However, it’s still unclear what the City Council is going to cut out of its proposed budget.

No council member has mentioned the L word – layoffs – or the F word – furloughs.

Two-thirds of the city’s 1,400 employees are in bargaining units, and the council pretty much agreed that those bargaining units wouldn’t have any interest in opening up contract agreements that are set to pay those employees raises of 3.25 to 3.5 percent.

So council members Kris Gulick and Monica Vernon said the council may have to lower wages for the other third of employees outside of bargaining units. The part-time council’s annual salary is tied to the cost of living index, which went up 1.1 percent in the last year, and maybe that is where wage increases should be for others, Gulick and Vernon said.

The City Council has been at its budget-making business for a good month now. That’s where council members have been Thursday evenings, and a Tuesday evening or two.

In the process, the city government’s department heads have trooped in, stating needs, making their cases for how to better deliver services.

Until last Thursday, it had been an odd few weeks. Everyone was asking for more. No one, including council members, was talking about less.

But then, after all, it was a time of recovery from a natural disaster.

Last Thursday evening, all those department heads were back, sitting, shoulder to shoulder, and listening to what the council had to say.

Suddenly, the tone shifted.