Iowa City Council indicates support for sales tax

Voters will see request for increase in November ballot

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June 17, 2014 | 7:45 pm

IOWA CITY – Johnson County voters should count on seeing a request for increasing the sales tax on November’s ballot.

What exactly they’ll be asked to spend the money on remains to be seen, however.

The Iowa City Council at a work session Tuesday night discussed sending a 1 percent local-option sales tax referendum to voters this fall.

They did not formally move forward, but a majority of council members indicated they support a referendum.

“We’re excited and we want to hear the details,” council member Rick Dobyns said.

The council will discuss it again at upcoming meetings, and a resolution putting the measure on the Nov. 4 ballot must be approved by the end of August.

Because it has more than half of Johnson County’s population, Iowa City has the power to call for the referendum. Residents in other towns in the county and the unincorporated area also would vote on it.

The local-option sales tax, or LOST, would take the sales tax in jurisdictions that pass it to 7 percent from the current 6 percent.

It would generate approximately $20 million anually for Johnson County governments to divvy up, including $9 million to $12 million for Iowa City, depending on which jurisdictions approved it, according to Iowa City.

Iowa City and its bordering towns – Coralville, North Liberty, University Heights and Tiffin – would vote together and the combined votes in favor would have to surpass 50 percent for the measure to pass.

Communities can decide for themselves how they would spend the sales tax revenue they receive.

Coralville and North Liberty leaders have said their city councils still need to discuss the issue.

An Iowa City committee recommends spending 60 percent on property tax relief, 30 percent on street improvements and 10 percent on affordable housing.

Council members debated those percentages during a 90-minute discussion.

Jim Throgmorton thought the tax relief percentage was too high because it has to include all property classifications, including commercial, instead of focusing on homeowners.

One of the reasons Iowa City officials want a LOST is to counter the $37 million they estimate Iowa City will lose over the next decade from commercial property tax reform passed by the state.

Michelle Payne and Kingsley Botchway II said they wanted to know what exactly was meant by affordable housing.

But whereas Payne said she would not support anything more than 10 percent for affordable housing, Botchway wondered whether it should be higher.

“We have not focused on what will actually keep people here from a housing perspective,” he said.

Susan Mims, who represented the council on the city committee, said what would fly with voters played a role in recommending the 60-30-10 breakdown.

“What do we think we can get passed, and what do people want the most?” she said.

Most Iowa communities have a LOST in place. Iowa City voters narrowly approved a four-year LOST in 2009, while Coralville and North Liberty voters defeated it. Communities were allowed to vote on it individually in 2009 under special legislation adopted following the 2008 floods.

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