Taxing questions

CEDAR RAPIDS - Voters will decide Tuesday if they want to extend the city's 1 percent local-option sales tax for 10 years to help pay for a new flood protection system.

On the eve of the vote, one question is this: Have city officials spent proceeds from the tax responsibly and as dictated by the March 2009 ballot language that put it in place? Or has the City Council secretly shifted spending to pet projects or otherwise misused the revenue, as critics of the tax suggest?

Gary Ficken puts it simply: “I don't feel that there's been any impropriety anywhere” in spending the revenue.

The chairman of the council-appointed LOST Oversight Committee, Ficken was a leader of the resident campaign that persuaded voters to put the tax in place until June 30, 2014, for flood recovery. He said he voted “no” on extending the tax for another 20 years last May, but now he's part of the new citizen campaign in favor of 10 more years.

In regular meetings over the course of nearly three years, Ficken said, the committee has disagreed with the council in just a couple of instances. The key disagreement, he said, centers on council members' decision to use sales tax funds to “match” federal dollars going to the new library and animal shelter. (The City Council also has said it may use some of the money for the new Public Works Facility.)

But such use of the money is in line with the 2009 ballot language, said Ficken, owner of flood survivor Bimm Ridder Sportswear.

That language states that 90 percent of the revenue from the tax will be used for “the acquisition and rehabilitation of flood-damaged housing” and for “matching funds for federal dollars to assist with flood recovery or flood protection.” Ten percent is used for property tax relief, according to the ballot language.

Spending tracked

According to a City Hall spreadsheet that tracks local-option tax spending decisions, the council has obligated $74.3 million of the money and spent $42.2 million so far. In all, the original 63-month tax is expected to bring in $80 million for flood-related uses.

To date, all of the spending from the 10 percent of revenue set aside for property tax relief also has gone for flood-related expenses, not general operating needs or other projects, the city reports.

Former City Council member Chuck Wieneke, who had been the council's liaison to the Oversight Committee, defends the spending decisions this way: “Every one of those things that the City Council has given money to has fulfilled the requirements of the ballot language approved by voters.”

Wieneke said some voters who cast ballots in 2009 to put the tax in place for flood recovery might now say they didn't intend that some of the money go to city flood-recovery building projects. But he said the ballot language approved by voters clearly made provisions for such spending.

Questions raised

Flood survivors Lisa Kuzela, a member of the LOST Oversight Committee, and Greg Vail opposed the extension vote last May and oppose it now. Both have received funds from the tax in its current form.

At a forum attended by 15 people this week, Kuzela, Vail and Tim Pugh painted a picture of city leaders as being untruthful and untrustworthy, saying they haven't used the revenue appropriately. The three said they expected that officials would divert revenue from an extended tax for pet projects in the downtown rather than using it all for flood protection, as required by Tuesday's ballot language.

Pugh said the city hadn't used the local-option tax proceeds for housing as required, though he was corrected by Kuzela. And Vail said he and others had a better, less expensive flood protection plan than the city.

Robert Crozier, who writes for an online newspaper called the Cedar Rapids Free Press, said one reason he didn't like the current tax was that the City Council was using some of its revenue for the Convention Complex and hotel projects. But that's not the case, city officials and Kuzela noted.

City Council member Justin Shields said he played a central role in creating the 2009 ballot language, and the drafters specifically crafted the language to allow some flexibility in spending the sales tax money - not realizing that the city would succeed, as it eventually did, in obtaining significant federal and state disaster funding.

The revenue “was never designed for one particular purpose,” Shields said. “At the time, we had no idea if we were going to get federal and state help. Very little was coming in. So the thought process was at that point, not knowing any differently, that we were going to have to do a great deal of this ourselves.”

As of Feb. 13 - nearing the three-year point of local-option sales tax collections in Cedar Rapids - the city had received $50,381,575 in revenue from it, city Finance Director Casey Drew reported this week. Of that amount, more than $42 million has been spent for programming related to housing and matching dollars (chart, 1A), along with $4,866,218 for property tax relief (list, above).