Corbett disagrees with Oversight Committee on option sales tax; so does committee chairman, who worries money for victims may be left in the bank

CEDAR RAPIDS - Mayor Ron Corbett on Wednesday did not see the City Council turning back on its commitment to use an estimated $10.5 million in revenue from the city's 1-percent local-option sales tax to provide for “unmet needs” of homeowners hit by the June 2008 flood.

Corbett said he disagreed with a vote Tuesday evening by the council-appointed Local-option sales tax Oversight Committee, which concluded that the unmet-needs spending was outside the scope of what voters approved when they passed the sales tax in March 2009.

A week ago, the City Council approved the unmet-needs program on an 8-0 vote, and Corbett called the committee vote “a difference of opinion” on a matter of “interpretation.”

He said he intended to move ahead with the unmet-needs program, for which qualified households can apply beginning today at City Hall, 3851 River Ridge Drive NE, and at www.Cedar-Rapids.org.

“I feel strongly about it, and unless the council does a 180 on it, we're going to continue to move forward,” Corbett said. Qualified households can receive up to $10,000 to replace personal belongings lost in the flood minus any earlier federal payments for such losses.

The disagreement between the council and the Oversight Committee comes at a time when Corbett and others on the council as well as some on the committee have expressed frustration that so little of the local-option sales tax revenue has actually been spent to date.

At the 15-month mark in the tax collection period of 63 months, the city has brought in $19.5 million in local-option sales tax revenue, 10 percent of which goes for property-tax relief and 90 percent flood-related matters. To date only $270,405 has been paid out for flood-related matters, though committee member Jeff Palmer noted that the City Council has obligated more than $50 million to be spent.

That so little has been paid out to date, two years after the flood, prompted Oversight Committee Chairman Gary Ficken to ask the committee Tuesday evening this question: Is it possible that the flood-related needs allowed by a strict interpretation of the ballot language creating the sales tax will be fewer than the $80 million raised by the tax to pay for the needs?

Committee member Palmer, for one, said that would not be the case, and he pointed to the more than $120 million in possible needs identified to date by the City Council for use of the sales-tax funds. Council member Chuck Wieneke, the council liaison to the committee, agreed.

On Wednesday, though, Ficken said he broached the question because he said, “I'd hate to get to the end of five years with money still sitting in the bank when we had an opportunity to get it into the hands of flood victims.”

For that reason, Ficken was alone in backing the council's unmet-needs program as part of 6-1 committee vote against the council program. The committee vote is only a recommendation.

Ficken said the council program fulfilled the “spirit” of the 2009 ballot language and would quickly get money into victims' hands. Too strict an interpretation of the ballot language might keep too much in the bank too long, he said.

Both he and Corbett on Thursday remembered back to the March 2009 referendum when Ficken said it was far from clear how the city was going to find the money to buy out more than 1,000 flood-damaged homes and businesses.

Consistent with his recollection, the ballot language begins by saying that the local-option sales tax must be used for “acquisition and rehabilitation” of flood-damaged housing.

Just a few months after the March 2009 vote, though, the city learned that the federal government had allocated sufficient federal funds to pay for nearly all that the city buyouts. In the end, much less of the revenue from the local-option sales tax will be needed for one of the priorities, buyouts, both Ficken and Corbett noted on Thursday.

For that reason, Corbett said the council has focused on steering the money to housing rehabilitation programs, though he noted that the state Jumpstart program also has helped out in that regard.

It is in a third part of the ballot language – using sales-tax revenue for “matching funds for federal dollars to assist with flood recovery and flood protection” - that the council and the Oversight Committee now disagree.

Corbett and the council say the unmet-needs program is designed to further provide some money to those who earlier received federal funding for some of their destroyed personal possessions. The program matches the earlier payments.

The Oversight Committee majority called the council reasoning overly creative and said the ballot language was intended to provide required local matches upon which federal funds yet to come were contingent. It was not for after-the-fact matches not required by the federal government, the committee majority said.

The ballot language does seem to have a safeguard against money going unspent when it states that money can be used to match federal funds for flood protection. The city is apt to face a big match requirement if it succeeds in securing federal dollars for a new flood protection system.