Campaign to vote ‘yes’ on 1% local-option sales tax kicks off in three Johnson County cities

IOWA CITY — Ahead of the November general election, a committee to support the passage of 1 percent local-option sales tax measures in Johnson County’s three most populous cities is leading coordinated campaigns.

The push for a local-option sales tax is part of an effort to diversify city revenue sources in light of property tax reform at the state level that limits the amount of growth a city can capture with taxes, while also dedicating funding to specific community priorities.

A simple majority vote is required to pass the tax, which would go into effect July 1, 2026. Under state law, 50 percent of the revenue must be put toward property tax relief. Local municipalities have discretion over how the other 50 percent is used.

Each city has its own ballot language and voters in each city must approve passage of the tax.

All local-option sales taxes are collected at the county level and then distributed to participating cities using a formula from the Iowa Department of Revenue that takes into account population and property valuations. That means the expected revenue each city can collect from the tax depends on which cities’ voters approve the tax.

The vote yes committee hosted a press conference Tuesday to announce its campaign and provide information about how tax revenue would be used, according to each city’s ballot language.

There is not currently an organized committee advocating against approval of the tax.

Iowa City to invest in affordable housing, community partners

The Iowa City Council has proposed the 50 percent of tax revenue not dedicated to property tax relief be split, with 25 percent directed toward affordable housing initiatives, 10 percent toward public infrastructure, and 15 percent toward community partnerships. The tax would not have a sunset date, meaning it would need to be repealed by voters.

“Each of these priorities are things council has identified through an inclusive process before they were ever talking about local-option sales tax as things this community really has called for,” said Tom Ricklin, a vote yes campaign committee member and Iowa City resident.

City staff estimate the tax could bring in as much as $8-10 million in annual revenue.

“I think Iowa City was very diligent about carefully curating that language around those priorities as well. It's intentional that the language isn't vague and that there's specific percentages allocated, just so there's transparency around where that money is going,” said campaign committee member and Iowa City resident Anthony Haughton.

Iowa City and Ankeny are the only two Iowa cities with a population of more than 50,000 that do not have a 1 percent local-option sales tax in addition to the statewide 6 percent tax.

Coralville plans for new $50 million recreation center

In Coralville, the tax revenue would be used to help fund a new recreation center.

The plan is estimated to cost $50-55.4 million. The 109,700 square foot space would include three gymnasiums, an elevated track, a spa and three pools.

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In the event that tax is not approved by Coralville voters, the city would pause the rec center project and look for alternative funding sources. City staff, using retail sales from FY24, have presented revenue scenarios that ranged from $3.6 to $7.3 million per year.

“The Recreation Center is the heart of Coralville and has something for everyone. It is where Coralville meets, and it is where Coralville plays, and the high quality programming provided there deserves high quality facilities,” said Stacey Houseman, Coralville resident and member of the vote yes campaign committee.

North Liberty looks to improve fire station, public safety

The North Liberty City Council is planning to direct its local-option sales tax revenue to capital projects such as the fire station and parks.

“North Liberty needs public safety facilities that meet the demands of our rapidly growing city. Local-option sales tax revenue would help the city build a fire station, and it would also keep residents safe now and in the future, as well support emerging needs for our growing community,” said Ashley Bermel, North Liberty resident and member of the campaign committee.

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City staff estimate that the additional sales tax could provide North Liberty with $1.7-3.9 million in revenue each year.

North Liberty voters in 2009 rejected a local-option sales tax ballot measure that called for 100 percent of revenue to be put toward road improvements. The measure was opposed by 61 percent of voters.

Affordable Housing efforts, visitor spending

While each city’s priorities with LOST revenue differs, each city has included ballot language that sates revenue could be used for affordable housing efforts.

Iowa City is the only city that has a guaranteed it will direct a percentage of revenue toward affordable housing. The other cities would need to approve the revenue allocation on an annual basis.

“A local-option sales tax will provide a new dedicated funding stream that allows cities to address our community's housing needs responsibly but also proactively,” Jessica Andino, executive director of the Johnson County Affordable Housing Coalition, said at Tuesday’s press conference.

The vote yes campaign committee is drawing attention to visitor spending in Johnson County, highlighting the millions of dollars spent each year.

“Local-option sales tax allows our communities to fund projects that matter by capturing spending from the millions of visitors who shop and dine in Johnson County every year,” said Nancy Bird, president of Greater Iowa City Inc. “Almost every other city in the state is collecting this revenue. It's time for our largest municipalities to use this popular and proven funding tool to support high impact projects and programs.”

Past Johnson County LOST initiatives

In Johnson County, voters in Swisher, Solon, Lone Tree and Hills passed local-option sales tax measures in the mid-2010s. Tiffin passed a local-option sales tax in fall 2023, and University Heights in fall 2024.

In 2014, due to state laws at the time, the cities of Iowa City, Coralville, North Liberty, Tiffin and University Heights voted on a local-option sales tax as one bloc. The measure was rejected by 54 percent of voters.

Comments: megan.woolard@thegazette.com

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