Fairfield Ledger

Mt. Pleasant News   Wash Journal
Neighbors Growing Together | Jul 17, 2018

Local option sales tax up for vote

Begun in 1999, tax raised $900,000 in Fairfield last fiscal year
By Andy Hallman, Ledger news editor | Nov 02, 2017

Jefferson County residents will go to the polls Tuesday to vote on whether to continue collecting local option sales tax.

Each town in the county gets to vote on the ballot measure, but it is only collected in towns that approve it, so it could take effect in some towns but not others. Residents of the unincorporated areas of the county will not vote on it. (Note: This has been corrected from an earlier version of the story suggesting all county residents could vote on it.)

In Fairfield, the tax adds 1 percent to sales in the city, on top of the 6 percent tax that goes to the state. Revenue from the tax goes into three separate funds: 50 percent toward streets; 25 percent toward property tax relief; and 25 percent for community betterment grants. The tax generated about $900,000 last fiscal year.

“Property tax relief” means the money will go into the city’s general fund. It is called “property tax relief” because it allows the city to spend money on projects without having to raise property taxes.


New wording

The language of this year’s referendum for Fairfield is different from the last referendum in that the verbiage about “community betterment” was simplified. The last couple of LOST referendums have stated that 12.5 percent of the “community betterment” portion of the tax would go toward paying for the Fairfield Arts & Convention Center building, while the other 12.5 percent would go toward “any other lawful purpose, including community betterment.”

In practice, community betterment has meant giving grants to local nonprofit organizations and governmental entities. For instance, earlier this year the council approved a LOST grant of $37,000 to the police department for a new squad car; $25,000 for an ambulance; and Fairfield First Fridays received $16,500. Twelve grants were given totaling $112,500.

Councilor Michael Halley, who serves on the ways and means committee, said the language about the convention center was removed from this year’s referendum because the debt will be almost paid off by the time the referendum would take effect, which is July 1, 2019. Halley said the committee and council wanted to be transparent about where the tax money goes, and did not want to mislead voters into thinking a large share of it was going to the convention center after 2019.

“I appreciate that we’re explicit in how it’s spent,” he said.


Reinvesting in the community

Mayor Ed Malloy said one only has to drive around to see the sales tax at work.

“We’re investing the sales tax into things that attract people to our community. We’ve funded a lot of street work in the last 10 years thanks to it,” he said. “A few years ago, we changed the tax so a portion would go toward our unrestricted reserves fund. I expect our bond ratings to be very strong because of the work we’ve done with those reserves.”


Sunset clause

Fairfield’s LOST referendum is different from other towns in the county that are also voting on their own LOST referendums in that it does not have a sunset clause. Residents in Batavia, Pleasant Plain, Libertyville, Lockridge and Maharishi Vedic City are all voting on LOST referendums, each one giving 100 percent of the proceeds to “any lawful purposes, including community betterment.” Additionally, each of those referendums starts July 1, 2019, and ends June 30, 2029.

Fairfield’s, in contrast, has no end date, meaning it will continue indefinitely unless a future council or citizen petition returns it to the ballot.

Neither Halley nor fellow ways and means committee members Tom Thompson and Doug Flournoy said the committee consciously removed the sunset clause from the referendum. Thompson said he was under the impression state law requires LOST referendums to sunset automatically after 10 years.

Iowa Secretary of State director of elections Dawn Williams said LOST referendums do not automatically sunset.

Thompson remarked, “I don’t recall that the sunset provision ever came up in the ways and means committee.”

Thompson said the language of the referendum was approved by the law firm Ahlers & Cooney of Des Moines. He also said he didn’t think the lack of a sunset clause was a big deal since the council could revise the sales tax at any time during any future election.

Halley said the language came from former city administrator Mike Harmon. When it came before the ways and means committee, the only revision the committee discussed was removing the language about the convention center’s debt.

“Most of us were under the impression it had a sunset,” Halley said. “Personally, I like the idea of sunset clause, so it can be reviewed and go up for a vote on a cyclical basis.”

Flournoy remarked, “The draft document we were working from did not contain sunset language and the committee was operating under the assumption that the authorization would automatically expire in 10 years. The ways and means committee asked the council to place authorization for renewal of LOST funds on the Nov. 7 ballot because the current authorization will expire on July 1, 2019. There are a limited number of opportunities to bring this issue to the public, and as one of the uses of the funds under the current authorization will soon no longer be needed, we felt it prudent to redirect those funds at this time.”

Malloy said the sunset provision is not as critical to the referendum as it might have been years ago, given the frequency with which LOST has been altered since it was approved nearly 20 years ago.

“We have a history of dealing with a change in the tax at any point that we wish to call an election,” he said. “The safeguard is there in that the city council can call a [new referendum] at any time.”


History of the tax

The local option sales tax began in Fairfield in 1999, after voters approved it to pay off the debt of what was then a brand-new $3.77 million, 32-bed county jail and law enforcement center. At the time, voters approved the tax through 2009, meaning it would cease unless residents voted to approve it again. The original formula called for 80 percent of the funds to go to paying off the law center debt, while the other 20 percent went toward community betterment, such as grants for local nonprofit groups.

In 2003, voters approved a new use for the sales tax: paying off the debt incurred to buy land and build the Jefferson County Civic Center, now known as the Fairfield Arts & Convention Center. Proceeds of the sales tax began going to the civic center in 2005.

In 2004, voters approved redirecting $240,000 from the sales tax to downtown improvements such as lighting and sidewalks, instead of letting it go to a law center maintenance fund.

Four years later, voters gave the sales tax a new assignment, to fund three separate city funds. At that time, the 25 percent that now goes to property tax relief went to sewers.

In 2010, voters approved giving half the money destined for community betterment to go toward purchasing the convention center building.

In 2015, the council asked voters to give the money that had been going to the sewer to “property tax relief,” which is another way of saying the city’s general fund. At the time, the city had just received grants for sewer repairs, but was running a deficit in its general fund, so the council felt it needed the money more in the general fund than in the sewer fund.



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