Selling the sales tax message

By The Gazette Editorial Board

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Selling Cedar Rapids voters on a 20-year sales tax extension in May likely becomes more difficult if the City Council OKs a property tax increase for the fiscal 2012 city budget.

The potential double hit on taxpayers surfaced over the past week. City Manager Jeff Pomeranz introduced his budget proposal, and the City Council called for a sales tax vote to bolster funding for the massive flood protection project and accelerate street repairs.

The budget proposal does not raise property tax rates, and total spending would increase a modest $350,000. However, homeowners would pay 7.84 percent more to balance the ledger with projected spending. That's because two other components affecting how much tax is collected have changed. The state says property valuations must rise 4.3 percent to be in balance with market prices. And the state increased its rollback formula, the percentage of a property's value used to figure the tax, by about 1.5 percent.

Thus, the owner of a $150,000 house would pay about $84 more tax to the city .

Before City Council members sign off a final budget in March, they will have to find places to cut or dip into reserves if they want to reduce the property tax rates and spare taxpayers an increase.

That's not to say proposed spending in the budget isn't justified. City leaders and staff are in the midst of juggling an unprecedented number of needs and projects as this community continues to recover from the 2008 flood and build for the future. Federal and state funding won't cover some of the gaps. The city also needs to maintain a substantial reserve not only for major unexpected expenses but to help cover some upfront costs that federal agencies are expected to reimburse later, rather than delay important projects.

Nevertheless, voters may not get why the city asks for both a property tax increase and a lengthy sales tax extension. Add in the proposed 4.8 percent bump in utility fees and some baggage, however undeserved, on how the current five-year sales tax has been used for flood recovery and you have a challenging message to deliver.

It's looking more and more likely that if this community wants close to what the city wants for flood protection on both sides of the river, we're going to have to generate a big share of it here. The sales tax extension looks like the most palatable way to do that, spreading the burden across more people, including visitors.

But even if the City Council holds the line on a property tax increase, city leaders will need to refresh residents' understanding of the flood protection plan and its impact. It's been more than two years since it was approved.

Mayor Ron Corbett says to expect public events to review the plan and explain the sales tax extension proposal. Delivering a clear, succinct message will be a critical task.