Mixed feelings on Johnson County tax

JOHNSON COUNTY — Not everyone in Johnson County is thrilled about how the extra 1 cent tax would be distributed, assuming the proposed local-option sales tax passes next Tuesday.

If approved, it would increase the sales tax from 6 percent to 7 percent. Moreover, it has the potential to generate nearly $20 million in countywide revenue.

But some officials in Coralville are unhappy with the state's LOST formula, which is based 75 percent on the most recent census data and 25 percent on property tax levies from 1983 to 1985.

If the 10-year tax passes countywide, every jurisdiction in the county stands to receive more LOST revenue than total taxes generate — except for Coralville.

That city would generate more than $7.5 million in taxes — 45 percent of taxes in the county. But it would receive only about $2.1 million in LOST revenue — less than 13 percent of extra taxes, using fiscal year 2013 tax numbers.

'I would like to see the formula go under review to see if it's still appropriate,' Coralville Mayor John Lundell said. 'It's a formula that's been used by the state for many, many years now.

'Clearly in our case in Coralville that would predate the development on the Coral Ridge Mall. The formula does not favor Coralville in terms of using 1980s population valuations. I can't think of a rational reason why the state wouldn't use current population valuation data.'

Iowa City Mayor Pro Tem Susan Mims, however, defended the formula, noting that much of the sales tax revenue generated in Coralville is spent by residents of other communities.

'It's meant to get those revenues — 75 percent of them — back based on population, so the people who are paying those sales taxes are getting a portion back into their community,' Mims said. 'I think it's a good formula, I think it's a reasonable formula and I think some of the reasoning behind it was, you don't want it just kept where it's collected because that creates incredible competition between cities to basically bring in retail to collect that sales tax,'

Iowa City would generate more than $7.9 million with the tax and receive more than $8.4 million in tax revenue, using the same 2013 data.

Unincorporated Johnson County would generate about $70,000 in tax revenue — less than 1 percent of countywide taxes — but get back nearly 25 percent, or about $4 million, in new tax revenue.

'Our poorest people'

Supervisor Rod Sullivan said he sees two sides to the tax argument. With the county ballot language planning to dedicate 90 percent of LOST revenue to roads and bridges, the added funds would benefit local projects.

But Sullivan also argued the regressive nature of the tax hits low-income residents the hardest.

'From the standpoint of the county government itself, having that revenue would help us to be able to do a lot of things in terms of roads and bridges that we can't do right now,' he said. 'But I have grave concerns over where this revenue comes from ...

I don't hear very much acknowledgment of the negative financial impact this can have on some of our poorest people.'

By law, Iowa City, Coralville, North Liberty, University Heights and Tiffin vote as a collective, with the tax passing or failing as a whole for the five cities.

Unincorporated Johnson County and the remainder of the county's cities vote independently on the tax.

Each community was tasked earlier this fall with drafting individual ballot language for where money would be spent if the tax passed.

In Coralville, the council elected to direct any LOST revenue to any lawful purposes, rather than specific projects, and that may have cost the city votes in 2009. It failed in Coralville by eight votes — 964 to 956.

'You give people the opportunity to find something they don't think the tax should be used for, and they'll end up voting against it,' Mayor Lundell said.

Iowa City's LOST revenue would go 50 percent to trails, infrastructure and streets, 40 percent to property tax relief and 10 percent to affordable housing.

'We felt for us it was important to delineate where the money was going, and I would just hope that people would look at the big picture, not only just in Iowa City or Coralville but for how this is better for anybody,' Mayor Mims said.

LOST formula: How much each community would generate and receive in LOST revenue

(Percent of countywide taxable sales/Percent of LOST revenue)

• Iowa City — 47 percent/50 percent

• Coralville — 45 percent/13 percent

• North Liberty — 5 percent/8 percent

• Tiffin — 1 percent/1 percent

• Solon — 1 percent/1 percent

• Swisher — Less than 1 percent/Less than 1 percent

• Oxford — Less than 1 percent/Less than 1 percent

• Lone Tree — Less than 1 percent/Less than 1 percent

• Hills — Less than 1 percent/Less than 1 percent

• Unincorporated Johnson County, Shueyville, West Branch, University Heights and Joetown — 1 percent/25 percent

How each jurisdiction plans to spend LOST revenue

• Coralville — 100 percent to any lawful purpose.

• Hills — 100 percent to water and sewer projects.

• Iowa City — 50 percent to trails, infrastructure and streets; 40 percent to property tax relief; 10 percent to affordable housing.

• Johnson County (unincorporated) — 90 percent to roads and bridges and 10 percent to courthouse updates.

• Lone Tree — 100 percent to streets, sewer and other lawful purposes.

• North Liberty — 50 percent to streets, 40 percent to utilities and 10 percent to parks.

• Oxford — 100 percent for community improvement projects and corporate purposes.

• Shueyville — 100 percent to general maintenance and city infrastructure.

• Solon — 90 percent to streets, storm drainage and infrastructure and 10 percent to recreation department for youth and senior citizen activities.

• Swisher — 100 percent to streets, sidewalks, public safety, water and sewer and any lawful purposes.

• University Heights — 100 percent to community space acquisition, streets, repairs or lawful purposes.

• West Branch (Johnson County residents) — 100 percent to city park projects.