The Gazette Editorial Board
‘Kicking the can down the road” is a phrase oft-hurled in the halls of Congress when it comes to addressing budget deficits, national debt and other big challenges. Simply put, it’s extreme procrastination.
Well, kicking the can happens at the local level, too. For the last couple of decades, even during prosperous times, elected decision-makers in Cedar Rapids have opted to defer some street maintenance needs in favor of not raising property tax rates or cutting public services. Meanwhile, the city and its traffic, including commuters, continued to grow. The state’s contribution from the road use tax fund, fueled in large part by the state gas tax, essentially has been flat, largely because the rate at the pump hasn’t been changed in 24 years and more people are driving more energy-efficient vehicles and don’t have to buy as much gas.
THE PERFECT STORM
Now, combine those things with increases in the cost of labor and especially materials — for example, hot-mix asphalt more than doubled and concrete rose by a third within the past decade. The result is a perfect storm of neglect.
At least 40 percent of Cedar Rapids streets are in poor or fair condition, and the average age is more than 50 years old. Patching patches doesn’t cut it. City staff estimate there’s actually up to $500 million in repairs and reconstruction needs.
Clearly, this scenario is the mother of all potholes and it’s only going to get worse unless something dramatic is done soon. Even if state lawmakers and the governor finally sign off on a state gas tax hike within the next couple of years — don’t hold your breath — the hole is too deep. We as a community need to take charge of the situation.
The only realistic option to do that is the one-cent local-option sales tax. The current LOST tax, which expires next summer, has been used for flood recovery-related projects since voters approved it in early 2009. Now, a 10-year extension is on the Nov. 5 ballot in Cedar Rapids, as well as other Linn County communities. In Cedar Rapids, the ballot language states that 100 percent of the proceeds would go “to pay for the costs of the maintenance, repair, construction, and reconstruction of public streets.” The sales tax extension would raise about $18 million a year toward the streets budget.
There are both thoughtful and ill-informed arguments against the proposal. Among the major concerns and criticisms:
l City leaders didn’t do what they promised to do with the current LOST revenue, so why should we trust them with an extension? Certainly, there’s room to disagree on the assistance decisions made by the City Council. Some were a stretch. And some individual cases might have been handled better. But there’s no evidence of misappropriation. The state Auditor’s Office review found nothing amiss. And do you believe City Council members intentionally and illegally try to stray from the ballot language? We don’t.
l The city bonded for $57 million toward the convention center complex project, the local debt going for the hotel purchase and renovation and building the adjoining new parking ramp. Why wasn’t that local money used for streets? A valid question. But without the bonding, the hotel almost surely would have remained closed, unattractive to potential buyers, and a drag on overall $145 million project. Convention centers don’t make money themselves, but they’re an asset that draws visitors and their spending in many venues here, which benefits the local economy. The hotel’s revenue is to help pay down the bond debt, and the City Council was convinced that the complex wouldn’t thrive without the hotel segment.
l Why can’t the city find the money for streets within the current budget? The enormity of the streets problem makes that option very difficult, especially if residents want to keep the services they have. Police and fire services account for 62 percent of the city’s operating budget. Payroll for all city departments is about 80 percent of the budget. Some savings could be found, but without actually cutting services, there wouldn’t be enough to make a dent in the street repairs. The city’s employee numbers overall are little changed from the mid 1990s.
l The sales tax is regressive, and weighs more heavily on the poor. Yes, that’s a legitimate concern. But streets and related infrastructure, such as sewers, are vital to a modern city’s operation, commerce and overall quality of life. The sales tax also spreads the burden more fairly to visitors and commuters who use our streets and shop here. That includes about 29,000 people who commute daily to work here — a figure nearly one-fourth of the resident population.
LESS, NOT MORE, BONDING
Another consideration in the sales tax extension debate: the city’s bonding capacity and rating.
In the last 17 years, the city has bonded for $140 million to help make up the state’s funding-gap share for street repair. State law limits cities’ bonding capacity to 5 percent of the community’s total assessed property valuation. Cedar Rapids, in order to maintain the highest rating (and thus the lowest borrowing cost) on bonded debt, uses a self-imposed limit of 75 percent of that state-mandated limit. As of now, the city’s remaining bonding capacity is $121.9 million.
It’s important not to substantially increase the amount of debt, not only because of the rating and the load on property tax payers in the near term, but for long-term planning. With a sales tax for streets in place, city leaders say they won’t have to bond for streets. They can pay debt down faster. And that can create more capacity for critical bonding needs in the future, including permanent flood protection that requires a local match of money to become reality.
So, add all this up and look at the big picture and our community’s future. Can Cedar Rapids really afford not to approve a sales tax for streets?
We don’t think so.