Is city spending local sales tax as meant to?

CEDAR RAPIDS - As the May 3 vote on extending the local-option sales tax by 20 years approaches, one might wonder about the revenue from the current sales tax.

Is the City Council actually spending the money, which is being collected through June 30, 2014?

Yes. As of April 14, the sales tax has brought in $33 million for Cedar Rapids since April 1, 2009. Council-approved spending has now crept ahead of the sales-tax revenue inflow. In total, the city has spent $33.7 million on eligible programs. The city's on-hand cash reserves temporarily cover the difference. Sales-tax revenue flows in at the rate of about $1.6 million a month.

Is the council spending it as voters intended - 90 percent for flood-related programs and 10 percent for property-tax relief? Depends who you ask.

The City Council, which decides how to spend the money, said, yes, it is spending the money as voters intended and only on programs that meet the ballot language approved by voters in March 2009.

Community Forum on April 21: A community conversation on the May 3 local-option sales tax vote hosted by SourceMedia Group and ImpactCR will be held on Thursday, April 21 at Harrison Elementary School, 1310 11th Street NW. Find more info. here.

“I will stand on any stage in front of the city's entire population and say this: ‘This money has been spent in an appropriate manner,' ” said City Council member Chuck Wieneke, who represents the flood-hit neighborhoods in northwest Cedar Rapids and is the council's liaison to the Sales-Tax Oversight Committee.

Assertions like Wieneke's, though, have not stopped the nine committee members from questioning council decisions. The committee's role is limited to opinions after decisions are made. The committee has approved a “vast majority” of those decisions, said Chairman Gary Ficken.

The ballot language of 2009 states that 90 percent of the tax must go “for the acquisition and rehabilitation of flood-damaged housing caused by the flooding of 2008 and matching funds for federal flood dollars to assist with flood recovery or flood protection.”

Wieneke and Ficken - flood survivor, owner of Bimm Ridder Sportswear and co-chairman of the community campaign to pass the local-option sales tax in 2009 - say residents must remember that when the 2009 ballot was written and approved, the city thought it would need most, if not all, the revenue to acquire or rehabilitate flooded homes. As time passed, though, the federal and state governments provided most of the money for that.

“Which is a good thing,” Ficken said.

So, Wieneke said, the two most robust discussions over sales-tax spending have centered on “matching funds for federal flood dollars.”

At one point, even Wieneke called it “imaginative” that the council defined matching as direct assistance to flood victims who earlier received federal assistance. The State Auditor's Office also weighed in on the matter, approving the council's decision. The Oversight Committee first disapproved and later approved the decision.

Most recently, the council has decided the ballot language also allows the council to use sales-tax revenue to match federal dollars to replace city buildings - the library, central fire station and animal shelter.

“Filling the gap in buying property for these three new city facilities is absolutely, totally in line with the ballot language,” Wieneke said.

For now, said Ficken, the Oversight Committee disagrees. He said the committee's focus from the start has been on home acquisition and rehabilitation before city buildings and infrastructure projects.

Ficken and Wieneke say the time is coming for the city to close some of the housing programs, so it is more clear how much money will remain for other uses.

To date, the city expects the 63-month tax to bring in about $80 million for flood-related programs. The council has identified $76 million in possible spending and obligated $68 million.

The obligation figure is worst-case and likely overstated, though, said Wieneke.

The City Council had identified funding gaps when the rules of federal programs excluded some flood victims from access to federal funds and where the city could use sales-tax revenue.

So the council approved a program to give flood victims direct payments to replace personal possessions that previous federal disaster payments had not covered. Flooded homeowners would get up to $10,000 and renters up to $4,000.

To date, two-thirds of all sales-tax spending for flood recovery - $20.26 million of $30.4 million - has gone for those direct payments. Recipients number 1,897 homeowners and 698 renters.

Currently, the Oversight Committee has opposed the use of sales-tax revenue for three of 15 council-approved flood-recovery programs, which in dollar figures amounts to $3.9 million. The committee doesn't weigh in on the 10 percent of tax revenue - $3.3 million - that goes for property-tax relief.