The LOST Sales Tax Vote

Now that Iowa City’s vote on the Local Option Sales Tax (LOST) has failed, the issue is not whether to bring a modified sales tax proposal before the public. Instead, the issue is whether to bother bringing another LOST vote before the public at all.

Why did it fail?

First, many voters have tax fatigue. The courthouse bond failed for the third time. Voters know a ginormous bond will be requested from Iowa City Community School District (ICCSD), which itself will follow voters’ generous approval of the use of sales tax money by ICCSD in 2013, a recently reapproved school physical plant equipment tax levy (PPEL), and a school infrastructure sales tax for ICCSD in 2007. Plus, voters approved a LOST in 2009 following the 2008 flood, and Iowa City voters helped get a $20 million dollar Johnson County Conservation bond approved in 2008. At some point, the well runs dry.

Second, many voters believe that Iowa City spends too much money on discretionary, non-essential projects. Examples of this include pursuit of the Gateway project to raise Dubuque Street eight or so feet and turning Market and Jefferson from one-way into two-way streets.

Third, Iowa City ignores significant revenue sources when it grants controversial TIFs. For example, Iowa City Council’s Economic Development Committee recommends that city council award a TIF to a developer for a 96 unit upscale apartment building on Riverside Drive* near campus which is to be marketed to young professionals and graduate students among others. Since when do students need TIF-subsidized housing?

Fourth, not enough voters approved of how Iowa City proposed to spend the sales tax money. Specifically, Iowa City promised to put 40% of sales tax revenues toward property tax relief. The state of Iowa is already giving commercial property owners a tax break by lowering the percent of assessed value they are taxed on. Enough. Speed up development of land around the Iowa City I80 exits and collect more taxes on this property. And Iowa City further promised to put 10% of LOST revenues into increasing affordable housing; however, it defined affordable housing as “households at or below 80% of area median income.” When did subsidized housing become fancy upscale housing for single young urban professionals making $40,000 plus? This definition is too broad.

Before asking for voters to approve yet another sales tax vote, Iowa City needs to reevaluate capital projects, focus on essential services, and stop using TIFs so generously. Organizing its own house before simply asking voters for more money is a necessary first step.

*http://www.press-citizen.com/story/news/local/2014/10/13/committee-oks-m-tif-bring-grocer-east-side/17203041/

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2 Responses to The LOST Sales Tax Vote

  1. Chris Liebig says:

    I think a lot of people voted against the tax because sales taxes are a particularly regressive way of raising revenue, since poorer people spend a higher percentage of their income than richer people do. It seemed especially strange to raise money through a sales tax and then use much of it to cut property taxes. Apparently the idea was that we’d be raising the money from “outsiders” who come here to shop, then cutting the property taxes of “insiders” who live here (which would, of course, give all the outsiders an incentive to do the same to us when we come to their counties). It was hard to get excited about that rationale.

    Like

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