SULLIVAN'S SALVOS
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-
"Sullivan’s
Salvos" is sent once per week to any interested party. It will give a
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serving you!
---Rod
posted by Rod Sullivan @ 5:23 PM
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