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Local Option Sales Tax a 10-year commitment

JOHNSON COUNTY– Next Tuesday, Nov. 4, Johnson County voters will determine the fate of a proposed Local Option Sales Tax (LOST) in their communities.
If approved by a majority vote, taxpayers within each approving jurisdiction will pay one cent more on qualified purchases beginning July 1, 2015, taking sales tax from 6 cents to 7 cents on the dollar. The tax will be limited to 10 years if it passes. Passage requires a majority of votes, or 50 percent plus one.
The one-cent sales tax was first proposed by the City of Iowa City. Concerned about the impacts of several state tax reform measures– including new tax rollbacks on commercial and industrial properties, a limitation on residential assessments, the change in tax classification of multi-family housing from commercial to residential, and a tax exemption for telecommunications properties– Iowa City leaders created a committee to address their estimated $37 million reduction in property tax revenues over the next 10 years.
A countywide vote can be called by a jurisdiction or combination of jurisdictions representing at least half of the county’s population. Because Iowa City contains 52 percent of the county’s population, it gave Iowa City officials the authority to have the LOST initiative placed on the November ballot. It’s also the reason Iowa City would get nearly half of the new LOST revenues should the measure pass.
Next Tuesday, Nov. 4, five contiguous cities will be voting as one block: North Liberty, Iowa City, Coralville, University Heights and Tiffin, and the tax will be effective in all five cities if approved. The communities of Solon, Shueyville, Swisher, Oxford, Lone Tree, Hills and a small portion of West Branch, as well as the unincorporated parts of Johnson County, will vote and implement the sales tax individually.
Each city’s council and the county board of supervisors had to craft ballot language designating how the additional tax revenues will be spent by each jurisdiction. LOST revenues can be dedicated to any lawful purpose, including street projects, sewers and water plant improvements, disaster mitigation, city facilities, equipment purchases, and property tax relief.
While the phrase “for any lawful purpose” is also allowed to be used on the ballot by itself, most councils adopted more specific language to let voters know what LOST would pay for in their own communities.
LOST tax revenues would be collected in all passing jurisdictions and put into a pool, then distributed back– only to those jurisdictions collecting the tax– using a state formula: 75 percent based on population, and 25 percent based on the amount of property taxes collected from fiscal years 1983 to 1985. If passed, the estimated pool of revenue totals about $17 million.
In July, Iowa City council member Susan Mims offered a scenario of how the additional one-cent sales tax would impact a typical family of two living in the 52240 zip code. Those with a household income of between $40,000 and $50,000 would pay an extra $104.64 per year in local option sales taxes, Mims said.
Iowa City and Des Moines are the only major metropolitan areas in the state of Iowa that do not implement a local option sales tax, while Johnson, Polk and Warren are the only Iowa counties wherein a major portion of their municipalities do not have a LOST.

Coralville
Estimated annual revenues: $2,120,594
Proposed use:
100 percent to any lawful purpose

Iowa City
Estimated annual revenues: $8,433,818
Proposed use:
50 percent to streets, trails, infrastructure
40 percent to property tax relief
10 percent to affordable housing

Hills
Estimated annual revenues: $81,987
Proposed use:
100 percent to water/sewer projects, sidewalks, street improvements

Lone Tree
Estimated annual revenues: $147,034
Proposed use:
100 percent to community improvement projects

North Liberty
Estimated annual revenues: $1,347,045
Proposed use:
50 percent to streets projects
40 percent to utility projects (to offset future increases)
10 percent to parks development

Oxford
Estimated annual revenues: $90,988
Proposed use:
100 percent to community improvement projects

Shueyville
Estimated annual revenues: $59,531
Proposed use:
100 percent to city improvement projects

Solon
Estimated annual revenues: $220,832
Proposed use:
90 percent to street improvements, storm drainage, water and sewer infrastructure
10 percent to support youth and senior activities

Swisher
Estimated annual revenues: $98,459
Proposed use:
100 percent to the general fund for city and streets improvements

Tiffin
Estimated annual revenues: $197,393
Proposed use:
100 percent to community improvements to include sidewalk, street, public safety, water and sewer
projects

Unincorporated Johnson County
Estimated annual revenues: $3,970,986
Proposed use:
10 percent for current and future needs of courthouse
90 percent for maintenance/improvement of
secondary roads and bridges

University Heights
Estimated annual revenues: $122,416
Proposed use:
100 percent for community space acquisition,
furnishing, maintenance, and upkeep; street
improvements and repairs; or any other lawful purpose

West Branch (Johnson County portion) 
Estimated annual revenues: $9,204
Proposed use:
100 percent for City of West Branch Park improvements