Some $30 million of LOST revenue now spent on flood recovery

CEDAR RAPIDS - The city now has spent $29.7 million on flood recovery from the city's 1-percent local-option sales tax and another $3.1 million from the tax has gone to property-tax relief.

And for the first time at the two-year mark of the tax's collection, the spending to date has inched ahead of the revenue that has come in, city officials said this week.

Council member Chuck Wieneke told the city's Local-Option Sales Tax Oversight Committee on Thursday evening that the council anticipated that the day would come when the pace of spending for flood recovery would move ahead of the pace in which the tax is collected.

The city, he said, will use other city funds and repay them as the tax revenue comes in. The city obtains about $1.6 million a month in revenue from the tax.

Each month, Drew Westberg, special assistant to the city manager, presents an updated spending matrix to show the Oversight Committee and the public just what the city is spending the tax revenue on.

At the City Council's Flood Recovery Committee meeting on Friday, council member Justin Shields asked Westberg to point out the line on the spending matrix that showed “all the misappropriated funds.”

Shields said his sarcasm was directed at people who make such allegations “but don't show you any concrete information.”

“I'm constantly trying to find out what have we done wrong,” Shields said.

With the upcoming May 3 vote to extend the tax for 20 years, it's important, he said, that the public understand that the city is spending the money as voters asked for it to be spent.

To date, by far the largest piece - $20.5 million of $29.7 million - of the sales-tax spending has gone in direct payments to flood victims for personal possessions lost in the flood.

This spending of up to $10,000 for a homeowner and up to $4,000 for a renter was first opposed by the citizen Oversight Committee, which is designed to offer opinions after the City Council makes spending decisions.

The council is bound to spend the revenue as directed by the ballot language approved by voters, who put the tax in place for 63 months in March 2009.

The language calls for 90 percent of the tax to be used for acquisition and rehabilitation of flood-damaged residential property and to “match” federal dollars for flood recovery and flood protection.

The Oversight Committee initially concluded that the word “match” as it relates to federal funds is for funds conditioned on a match of local funds. The personal possessions program matches federal funds paid earlier to flood victims and not federal funds conditioned on a local match. However, the State Auditor's Office concluded that the personal possessions program met the ballot language, and the Oversight Committee reversed its opinion and endorsed the spending.

More recently, the City Council approved using $4 million in sales-tax revenue to help buy land upon which the new library will sit. The local money is needed to match federal disaster funds for the project, the council has said.

The Oversight Committee, on a split vote, has opined that the library spending is inappropriate, with one person who voted against the idea saying voters really intended for the money to go only to flood victims. Another spoke against the spending because the City Council didn't pick the least-expensive site for the library.

The tax is expected to bring in about $84 million for flood-related matters over 63 months. To date, the council has obligated $68.7 million of the funds, though several of the programs obligated for funding will not need as much as the council once thought.

At the time the sales tax was put in place, the City Council had no idea that the federal and state governments would provide ample disaster funds to pay for most of the cost to renovate flood-damaged homes and to buy out more than 1,300 flood-damaged properties.