Citizen’s Guide to the Sales Tax Referendum

Special Election May 5, 2009

Official Referendum Results - Johnson County Auditor's Office updates

The voters of Iowa City approved a one cent local option sales tax on May 5, 2009. This tax will be collected for four years, beginning July 1, 2009. This page provides information on the election process and what projects will be funded with the sales tax proceeds.

How will the election work?
Each community in Johnson County votes separately on whether the sales tax will be collected in their community. The tax is passed by a simple majority (over 50%) of the voters. The ballot language for each community states how its share of the sales tax proceeds will be used. Only communities that pass the tax will share in the proceeds.

How will the sales tax revenue be distributed?
The sales tax revenues from all communities that vote “yes” are pooled, and that amount is shared only by those communities that vote “yes”. By state law the funds are distributed according to a formula that is based on population (75%) and property tax dollars levied (25%). The funds are not distributed according to where they are taken in, but on the basis of this state formula.

Those communities that reject the sales tax are not only rejecting potential revenue collected from their own community but also a share of revenue collected from other Johnson County communities that vote “yes”.

Example: If Coralville voters approve the tax and Iowa City voters reject it, Iowa City will not share in any of sales tax collected in Coralville.

How much revenue will be collected?
It is estimated that if all jurisdictions in the county pass the tax, approximately $17 million in sales tax will be collected in the county each year. Iowa City’s share will be approximately $9 million per year or $36 million over four years.

Who will pay the tax?
Anyone who shops in a community that approves the sales tax will contribute. Over 21 cents of every dollar of sales tax collected will be paid by non-residents and visitors.

What goods are not taxable?
Sales taxes are not collected on groceries, prescription drugs, gasoline and vehicle purchases.

What other major cities in Iowa do not have a local option sales tax?
Currently Iowa City and Des Moines do not collect a local sales tax. Davenport, Sioux City, Waterloo, Council Bluffs, Dubuque and Ames all collect sales tax revenue. The voters of Cedar Rapids recently approved a sales tax for their flood recovery.

How will the tax revenue be spent?
The flood of 2008 revealed major vulnerabilities in some of the city’s vital public roads, bridges and other public facilities. Sales tax proceeds will be used for improvements that will help the city maintain vital transportation, emergency, and public health services in both routine and emergency situations.

The ballot language for Iowa City states:

0% of the revenues generated by this tax will be used for property tax relief and the remaining for the following specific purposes: 100% for remediation, repair and protection of flood impacted public infrastructure and local matching funds for dollars received from any federal or state programs to assist with flood remediation, repair and protection of flood impacted public infrastructure.

More frequently asked questions

How the tax revenue would be spent:

Based on current funding projections, the City Council has indicated that the following two projects will be priorities for use of the sales tax. These are very costly projects. Sales tax revenue alone will not pay for these projects and they are not eligible for the current federal “stimulus” funding. Sales tax proceeds will be used to provide local match for available state and federal funding and to reduce our reliance on property tax and increased user fees otherwise needed to fund such projects.

Elevation of Dubuque Street & Reconstruction of the Park Road Bridge

Estimated cost: $32 million

Background: Dubuque Street serves as our primary link to I-80 and access to major employment centers including the UI campus, hospitals, and downtown. It is also our lowest arterial street. During the 2008 flood Dubuque Street was submerged for an entire month; in 1993 it was submerged for nearly two months and it floods several times each year from locally heavy rains. The Park Road Bridge was constructed in the early 1960’s and is in need of structural repairs and traffic capacity improvements. During the 2008 flood the bridge was observed to produce increased water levels upstream by as much as 14 inches.

The proposed project will elevate Dubuque Street from Foster Road to just south of Park Road. It will also replace the Park Road Bridge with a structure that is higher and longer so that it will remain open and reduce the level of upstream flooding.

Benefits of project:

• Keeps major entrance/exit to the city open during future flood events, maintaining access to employment centers, health and emergency services, and residential areas.
• The improved hydraulics of the new bridge will reduce flood levels in neighborhoods upstream from Park Road.
• The project will replace a bridge that is in need of costly structural repairs.
• The new bridge will reduce the likelihood of the city being split by the closure of all bridges during future floods. If the 2008 flood had reached 4 inches higher, all river bridges would have been closed.

Relocation of the old North Sewer Plant

Estimated cost: $63 million

Background: The North Sewer Plant is located directly adjacent to the Iowa River and was inundated during the 2008 flood. The plant, originally built in the 1930s, is located near the old National Guard Armory and flooded Animal Shelter (at the south intersection of Kirkwood and Clinton Streets). It is called the "North Plant" to distinguish it from the much newer sewer plant to the south, located off Sand Road. Operations during the 2008 flood were severely limited and required significant emergency operations.

This project will move all wastewater treatment operations to the South Plant site which is outside of the Iowa River floodplain. A sewer already connects the two sites that will allow flow to be routed to the new location.

Benefits of project:

• Improved public safety and environmental stewardship will be achieved through better and more reliable wastewater treatment.
• The new facilities will make Iowa City better equipped to comply with future wastewater regulations.
• In addition to improved flood protection, the new facilities will help contain future sewer rate increases by replacing 1930’s era facilities that are in need of major repair and are ill-suited to comply with future wastewater regulations.

Requests for more information can be directed to the City Manager's office at 319-356-5010.