Divisions show over Johnson County sales tax proposal

Fairness of tax, use questioned

By Gregg Hennigan, The Gazette
Published: July 28 2014 | 7:00 pm - Updated: 28 July 2014 | 8:00 pm in Government, Joco, News,

TIFFIN — Johnson County elected officials acknowledge getting voters to approve a sales tax increase will be tough, and on Monday the differences between government representatives themselves were clear.

A Coralville City Council member said he was opposed to a local-option sales tax vote this fall. And other officials were lukewarm to a county request to dedicate some of the sales tax money to a courthouse project.

All of this comes before the measure is even officially on the ballot.

“I think this is going to be a challenge for us to get this passed,” said Iowa City Council member Susan Mims.

She was speaking at a gathering of Johnson County area officials in Tiffin City Hall. The first hour of Monday’s meeting was dominated by the countywide local-option sales tax vote Iowa City has called.

Jurisdictions that approve it would see their sales tax increase to 7 percent from 6 percent.

If all communities pass it, up to $20 million would be generated annually, with Iowa City getting about half of it.

Coralville City Council Member Tom Gill said he’s opposed to the sales tax, however, calling the formula for how the money is distributed unfair and archaic.

“It is not equitable,” he said. “And I would pound the table: It is not equitable.”

The biggest factor for how the local-option option sales tax is distributed is population.

By Iowa City’s estimate, Coralville would get $2.5 million if all Johnson County communities approve it, far less than Iowa City and even rural Johnson County. Coralville is home to Coral Ridge Mall and is nearly equal to the larger Iowa City in taxable sales. Coralville’s city administrator made a similar argument in June. Iowa City officials have answered by saying Coralville, with a population of 20,000, relies on people from elsewhere inside and outside of Johnson County to shop at its stores.

“Businesses don’t pay sales tax. People pay sales tax,” Mims said before Gill spoke.

Because of its size, Iowa City has the power to call for the election, so the sales tax will appear on the ballot regardless. Cities and the county must decide on the ballot language in their communities by Aug. 27, and that was the other point of discussion.

Johnson County’s Board of Supervisors has asked each community to put 10 percent of their local-option sales tax revenue toward a county courthouse annex. A $30.8 million bond to fund a building south of the existing courthouse to address safety and space concerns also is to be on the November ballot.

Iowa City has said it would do that if its neighboring cities and the county do as well. By law, Iowa City, Coralville, North Liberty, University Heights and Tiffin must vote together on the sales tax.

No community has officially set its ballot language, but North Liberty and Solon city council members have indicated streets are their priority and they are not inclined to put money toward the courthouse. Tiffin still must discuss it. And University Heights Mayor Louise From said Monday her council likely is supportive.

Coralville also must still talk about it, but Mayor John Lundell said he worries linking the two ballot questions could confuse voters.

Some city officials said they want to know how long the tax would be in effect, something the county controls, before they make a decision. But county Supervisor Janelle Rettig said for her, the term depends on if the cities are willing to commit to the courthouse annex.

Rettig also indicated that even as she makes decisions on the sales tax, she has problems with it and believes it disproportionately affects low-income people.

“I happen to think sales tax is a regressive tax, so I have to hold my nose to start with,” she said.


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