Alliant Energy, City Water rates... increasing, so will Iowa State Income Taxes be next?

Take a look at the Wednesday, February 25, Radio Iowa article titled, "Democrats suggest massive tax overhaul a possibility." For more on taxes issue, read the Public Interest Institute article: "No Income Tax: The Key to Economic Growth."

We face a very challenging recession, property taxes are expected to increase. Voters in Cedar Rapids and Linn County will vote on March 3Rd to raise their sales tax by one percent. Now, it appears the State of Iowa is going to look to raise state income taxes.

Economic development and job creation in the State of Iowa may find the road tougher and tougher in the private sector. Commercial and industrial property taxes are already hit hard in the State of Iowa.

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March 3Rd Local Option Sales Tax approaching for Cedar Rapids and much of Linn County, Iowa

Is the Cedar Rapids ballot language clear and well written? Unlike Iowa City, the City of Cedar Rapids rushed to get the sales tax thrown together and on the ballot for a March 3Rd vote. The City of Iowa City took their time and will vote May 5, 2009, as Iowa law provided.

Does Cedar Rapids have other options? Yes, they can redraft the language and get it right for taxpayers for an August 4, 2009 or November 3, 2009 vote. The City of Cedar Rapids can re-write the language and a re-vote is possible, if the voters in the City of Cedar Rapids turndown the March 3Rd ballot language. The following article by The Gazette's Adam Belz answers questions on the local-option sales tax points out this option for the City of Cedar Rapids and taxpayers (voters).,

For more information on the upcoming vote on March 3rd in Linn County, visit the Linn County Auditor's web site.

The Gazette has another interesting development on the upcoming Local Option Sales Tax.
Sales tax law change affects amount to counties The Gazette points out...

A little-noticed change that is part of the state's new local-option sales
tax law significantly reduces the amount of revenue coming to unincorporated
Linn and Johnson counties and increases the revenue that could go to the city of
Marion and Iowa...

Cedar Rapids State Senator Rob Hogg worked out a change in the State's formula, as the article points out.

The City of Cedar Rapids did rush the vote for March 3Rd. They are completing resolutions to clean up the damage, but voters should be careful, because like the Board of Supervisors pay issue, the City Council can change resolutions as easy as they create them. The ballot language is what really is key, when reviewing the merits of a 5 year and 3 month local option sales tax.

On Monday, Doug Neumann of the ERPC discussed with the Rotary Club of Cedar Rapids as The Gazette reported in the following article Cedar Rapids recovery group asks for $22.4 million.

What happens if local-option sales fails... as The Gazette web site is painting...

Ask Rob Hogg what will happen if the proposed local-option sales tax fails
March 3 in Cedar Rapids, and he paints a grim picture. The state senator
envisions blocks and blocks of abandoned homes rotting in the summer heat and
humidity, surrounded by... More
>>

Well, one real option for the City of Cedar Rapids and taxpayers have is a re-vote and better ballot language. There is more than one way to skin a cat. If Cedar Rapids needs to get a "skin in the game" shouldn't it be done right?

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Where's the Oversight on the 1% Local Option Sales Tax for Cedar Rapids?

Re: The March 3, 2009 Sales Tax Vote for the City of Cedar Rapids.

Today, we received the following cover letter ahead of a short one question e-mail survey on the 1% local option sales tax (LOST) for the City of Cedar Rapids from the Cedar Rapids Small Business Recovery Group.

The Cedar Rapids Small Business Recovery Group would like to take a
straw poll of flood affected businesses to gauge where the flood affected small
business community is on the Local Option Sales Tax issue:

Framework of the sales tax:

Rate of Tax: 1% Sunset Period: 5 years and 3 months (4/1/09-6/30/14)

Oversight Committee: A citizens committee will be formed to decide the
funding priorities and options for the money raised

Ballot Language: For the City of Cedar Rapids: 10% for Property Tax
Relief; and The specific purposes for which the revenues shall otherwise be
expended are: 90% for the acquisition and rehabilitation of flood damaged
housing caused by the flooding of 2008, and matching funds for federal flood
dollars to assist with flood recovery or flood protection.

We have supported the need for discussion of a 1% local option sales tax, ever since the change in the form of government. Property tax relief and infrastructure repairs and replacement were certainly needed prior to the Flood of 2008. The State of Iowa and the City of Cedar Rapids have an over reliance on property taxes. Right now, the City Manager and City Staff are recommending a 14.7% increase on property taxes for next year's budge. The City Council disagrees at this point on such a high increase.

But, here are our real problems with the 1% local option sales tax:

1. Ten percent isn't significant property tax relief for the City of Cedar Rapids, especially after 20 percent was discussed by our Mayor.
2. The Tax isn't defined as the Small Business Recovery Group's survey pointed out: "A citizens committee will be formed to decide the funding priorities and options for the money raised"
3. So, who is going to oversee the oversight committee?
4. We are concerned about inequities in the tax as it is defined on the ballot.

The local school SILO tax was specifically spelled out and there was a clear oversight committee to review the performance of the tax that it was going to the items laid out in the ballot language. Of course, the State of Iowa has decided to strip the local school tax and take it statewide permanently.

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A Return to open-ended welfare with Stimulus?

"The House stimulus bill endangers Clinton's biggest reform." -WSJ

The Tuesday, February 10, 2009 edition of The Wall Street Journal in the Opinion section featured an article titled, The Return of Welfare As We Knew It. For more on this issue, read Public Policy Institute Brief: Federal Experiment in Welfare Yields Success.

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Transapaency and Accountablity in State Government

The Monday, February 9, 2009 edition of The (Cedar Rapids) Gazette in the Iowa Today section featured an article titled, Lawmakers want to know about bailout money. For more on transparency in government, read Iowa Economic Scorecard: Transparency in State Spending Encourages Limited Government.

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Is Washington going the right direction on Stimulus?

The Thursday, February 5, 2009 edition of The Washington Times features a story, Obama prods senators on stimulus.

It's interesting to see other cities wanting stimulus, while Cedar Rapids waits for Federal aid due to the Flood of 2008, reflecting on our City Manager's comments regarding the first 90 days for Grand Forks compared to relief received for Cedar Rapids.

The size of the House plan and the pork elements in the plan give cause for concern in the Heartland? For more on economic reform read the Public Interest Institute Brief: Ryan's roadmap.

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Rebuild Iowa Office: Opens satellite location in Cedar Rapids nearly eight months after Flood of 2008

It has taken nearly eight months, since the Flood of 2008 rolled through the City of Cedar Rapids, but a Rebuild Iowa Office has opened a satellite location here in Cedar Rapids. For more information on recovery in the Corridor... the following web site has been set up since the early days of recovery.

Information on the 1% LOST, local option sales tax vote for March 3, 2009.

Linn County Board of Supervisors Approves Local Option Sales Tax Resolutions

Cedar Rapids City Council Approves LOST Resolution

The City of Cedar Rapids Budget in 2006 was $292 million. Today, the city budget stands at $351.7 million.

From the sounds of it, city water rates will increase 14% and property taxes will raise six to ten percent, depending on whether it is commercial, industrial or residential property. The new 1% local option tax could raise the budget as much as $18 million per year. Plus, a six to ten percent increase in property taxes, which account currently for 24.1% of the $351.7 million budget, could likely add another $5 to 6 million?

It looks like the $292 million city budget before the vote to change the Cedar Rapids form of government in 2005 has gone from $292 million to a future budget of roughly $375 million, in less than four years into the new form of government?

The City of Cedar Rapids have a long recovery ahead, as The Gazette article on July 12, 2008 predicted, one month after the June 2008 flood. Our City Manager pointed out recently...

“So far, the City of Cedar Rapids has only received $38 million in Community
Development Block Grant funds. In comparison, ten years ago the City of
Grand
Forks, ND received $135 million from the federal government within 90
days of
its devastating flood,” - Mr. James Prosser, City Manager

Cedar Rapids was and needs again to be an economic engine in the State of Iowa. With a $5 to $6 billion now being communicated, the early projections appear to be vastly understated from today's figures being discussed within the community. This link talked about $1 billion for Cedar Rapids. It appears early numbers may have hurt our community, as compared to other cities that received aid in the past.

Further, unlike back in April 1997, when the Grand Forks was devastated by a flood, the City of Cedar Rapids faces road blocks in Washington D.C. and with the current economy. Further, leadership needs to come from somewhere.

Regardless of the Flood of 2008, efforts by our City Manager and City Council were in place to find ways to increase revenue for the City of Cedar Rapids. Lobbying efforts were in full gear as the City of Cedar Rapids celebrated the "Year of the River" in 2008.

The Solution likely isn't in new taxes. But, like the advise that Ed Failor, Jr. President of Iowans for Tax Relief gave to State of Iowa and our Governor: "The problem is out-of-control government spending and budgets."

What if Cedar Rapids took the current budget and cut out-of control government spending and took the savings and put it into Flood mitigation and infrastructure priorities?

"We know from experience that when you raise taxes during an economic
downturn, you hurt the economy," - Steve
Forbes

"Raising taxes — we tried that in the Great Depression.
We tried
that in the 1970s. We tried that in the 1990s. I don't know why we
have
to run
this bad movie again." - Forbes

We currently have a $351.7 million budget. The solution for the near future is better priorities and cuts in wasteful programs. Not more taxes. If we don't maintain our economic engine in Cedar Rapids, we may end up even worse off than we are now.

Further, Iowa's Tax System isn't outstanding. Instead of overhauling the system, our State Legislature is looking to expand tax options for cities and counties. We need to find ways to encourage growth in Cedar Rapids, not discourage it.

Per the Chamber of Commerce release today:

The 1% local option sales tax is not for flood mitigation infrastructure, but...

"The ballot language states that 90% of the tax will fund the acquisition and
rehabilitation of damaged homes, as well as, support relief efforts toward
damages caused by the 2008 Cedar River flood. While 10% of the funding will be
used to offset the property tax burden."

The original discussion reported last week was as follows: "the draft language calls on the revenue raised by the tax to be used in Cedar Rapids in two ways: 20 percent of the revenue would be used for property-tax relief; and 80 percent would be used for flood protection and for the acquisition and rehabilitation of flood-damaged housing," according to The Gazette's Rick Smith and comments from the Mayor.

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