Rod Sullivan, Supervisor, Johnson County, Iowa

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August 8, 2014

Sullivan’s Salvos     8/12/14

In this edition:

*RIP Patrick Hughes
*Happy Birthday Melissa!
*LOST Discussions
*Did You Know?

*RIP Patrick Hughes
         Johnson County lost a real giant with the passing of Patrick Hughes. Much has already said about his life… I’ll just add one thing.

         As you go through the next few weeks, try to view everything through this lens: Which Side Are You On? Think of Patrick as you do that.

*Happy Birthday, Melissa!
         My wife Melissa celebrates her birthday on August 17th. Those of you who know her know that I am a very lucky man!

         Happy Birthday, Honey! I love you!

*LOST Discussions
         As you probably know, the City of Iowa City has called for an election on a Local Option Sales Tax (LOST). State law allows any city to make this decision so long as that city holds 50% or more of the population in their county. Iowa City makes up 52% of the population of Johnson County. So the vote will be on the November ballot.

         I have already written at length about my philosophy in terms of sales taxes versus property taxes (and income taxes). I am no fan of sales taxes. But the piece today is more about the mechanics of the LOST and discussions held to date.

         First the distribution formula: LOST revenues are distributed using a formula that allocates the revenues 75% on population and 25% an antiquated property valuation formula. Some of my Coralville friends feel this is very unfair; their argument is, “We have invested in this retail area; we should reap the benefits.” That is a legitimate argument. The formula should really be 75% population, 25% point of sale.

         On the other hand, many of the things that have contributed to Coralville being a retail center have been provided by the state and federal governments. This includes I-80, I-380, Highways 965, 6, and 218; other state and federal highway funds; state investment in Oakdale Research Park and the IRL; I-Jobs funding, state flood recovery dollars, state money for sewer and water projects, federal Brownfield money… the list goes on and on. All taxpayers funded these projects, not just residents of Coralville.

In addition, we have seen how badly “point of sale” has worked in other states. Until they made some changes, Illinois had some cities with huge property tax rates while retail rich cities had virtually no property taxes at all. This created a situation where the rich continued to get richer, and disparities grew to the breaking point.

Plus, people from all over pay the tax, not just Coralville residents. Take unincorporated Johnson County, for example. There are about 22,000 unincorporated residents, but very few retail outlets. Under a point of sale system, rural residents would pay the tax but accrue very few benefits.

Finally, it is just difficult for someone who works for Johnson County to listen to anyone from Coralville complain about issues of tax fairness. There are 40 million reasons that argument does not work. That is a whole different discussion, and not one to be held today, but it cannot be ignored.

So while I understand and respect the Coralville argument, I feel a 75-25 formula is a pretty fair way to distribute the LOST revenues.

         Moving on from the formula to the vote: The LOST vote is held separately in the unincorporated areas, Swisher, Shueyville, Oxford, Hills, and Lone Tree. If it passes in any of those places, that city gets a share of the revenue. Iowa City, Coralville, North Liberty, Tiffin, and University Heights vote as a bloc. If 50% plus one of the voters in that bloc vote “yes”, the tax is in place for the whole bloc.

         So theoretically, every city but Iowa City could vote against the LOST, but if Iowa City voters outvoted them, the LOST is in place. Conversely, Iowa City voters could turn down the LOST, but voters in the other cities could pass it over their objections. City boundaries do not matter; in this election, those 5 cities will be voting as one.

Each city in the county plus the county itself gets to determine how any LOST revenues will be spent. But the plan for the money must be spelled out in ballot language. It can be as vague as “any lawful purpose”, but it must be spelled out.

         Moving on to the duration of the tax: State law gives the County Board of Supervisors the sole power to set the duration of the LOST. The duration is the same for all cities who pass the tax. Iowa City has requested ten years; in informal discussions, elected officials from other communities said they would like to see it go even longer. Meanwhile, Coralville officials indicated they would prefer 7 years. I suspect every city will be sharing thoughts with the Board soon.

         Moving on to the timing: Ballot language from every city (and the county) is due August 27, as is the question of duration. The Board of Supervisors is likely holding a public hearing on the LOST at our August 14 evening meeting, and will likely take formal action at 9 am on August 21. Technically, we could act up until August 27th, however.

         Moving on to the county uses of the LOST: As I mentioned, each city decides how to spend its share of the LOST revenue. The same goes for the county, which decides how to use its share.

         This was complicated a bit when the county requested that all the cities put 10% of their LOST revenues toward the proposed Courthouse Annex. Obviously, cities would not be obligated to do so, but doing so would reduce property taxes for all county residents. Iowa City had indicated an interest in doing so, so long as the other cities in the “bloc” (Coralville, North Liberty, Tiffin, and University Heights) do the same. Those cities still need to hold those discussions.

         I’m not certain how I feel about this. I think it high time our cities helped the county with SOMETHING. I did not think it would even be worth asking; I was surprised when anyone said they would consider it. Unfortunately, I have come to expect cities doing anything and everything they wish, with no thought to the county whatsoever.

         I’m not thrilled with the “threat” the county used, potentially holding the duration of the LOST hostage to city cooperation. I’m sick and tired of being treated badly by cities, but I’m not certain returning the favor is the way to go.

         The issue was complicated even further when Iowa City Councilor Kingsley Botchway asked each entity to consider designating 10% of the LOST revenues toward affordable housing projects. (Iowa City has already decided to do this.) It is unclear if other cities will make this move.

         Understand – my saying that these two efforts have “complicated” the LOST discussions does not mean I am opposed. We SHOULD be having long and complex discussions between local governments. I simply say this to point out that there are many moving parts to this thing.

As for the county’s own discussions about allocating the revenues: Each Supervisor put forth her/his own personal ideas for the revenue. I wanted to spend 40% on roads and bridges, 20% on public safety, 20% on debt reduction, and 20% on health and human services. (In my thinking, debt reduction includes the Courthouse Annex, and health and human services includes affordable housing.)

Supervisor Rettig came up with a proposal very similar to mine, which is interesting, because we never spoke a word about it. Supervisors Harney and Etheredge wanted 90% for roads and 10% for the Courthouse Annex. Supervisor Neuzil started there, and offered to consider 10% for affordable housing, but only if that money was used exclusively in the unincorporated areas.

         I could not see using affordable housing money only in the unincorporated areas. First, everyone has paid the tax; it would accrue to the General Fund, not the Rural Fund. Secondly, we do not need more affordable housing in the unincorporated areas. That is not a cop-out; it just doesn’t work well. Affordable housing should be accompanied by public water, public sewer, public transportation, and other public services. When it is not (see Regency) very bad things can happen. I think Johnson County should definitely be funding affordable housing – just not in the unincorporated areas.

         So, negotiations ceased, and Supervisors Harney, Etheredge, and Neuzil voted to use the money 90% for roads, 10% for the Courthouse Annex.

         Where do we go from here? It will be interesting to see what, if any, conversations we might have with other elected bodies. As I wrote last week, the discussion over the LOST was the best intergovernmental discussion in my ten years on the Board.

         What will I do? As I said, I am philosophically opposed to the LOST. In order to vote for it, I need to see a great deal of willingness to invest some of the revenues in ways that benefit low-income folks. Right now, I do not see enough of that. It appears that on the Board of Supervisors (and elsewhere) they have the votes. So they do not NEED to negotiate with me. We will see if anyone reaches out.

         Meanwhile, it is going to require some more progressive action for LOST proponents to earn my vote.

*DID YOU KNOW?  The last LOST vote (2009) passed by 7 votes in Iowa City, and failed by 8 votes in Coralville. That was a special, flood-related LOST in which the cities did NOT vote as a block.

Anyone interested in learning more about County government should take a look at the County website-

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