Council discusses ideas regarding renewal of local option sales tax

By James Grob, jgrob@charlescitypress.com

The Charles City Council on Wednesday discussed taking the first of what will be several steps over the coming months in preparation for a public vote on the renewal of Charles City’s local option sales tax.

City Administrator Steve Diers said he put the item on the planning meeting agenda because he believes the board needs to give the issue some thought and consideration.

The tax is a 1% sales tax that was initially approved for use funding paving projects within the city 20 years ago, then renewed again 10 years ago. It was approved by voters with a 10-year sunset clause, meaning it needs to be voted on again every 10 years.

Diers said the tax is how the city funds all of its major street projects. On Dec. 31, 2022, the sale tax will expire, so Diers said if the city plans to re-approve or “renew” the sales tax, the council needs to start work now.

“We need to be judiciously moving forward on a plan for to pass it again,” Diers said. “Without that, we wouldn’t be able to do near the street repair work that we do.”

The tax typically brings in between $800,000 and $900,000 dollars per year, and has brought in as much as $950,000 in revenues for the city. This past year, Diers said $850,000 was budgeted from the tax.

“It’s a pretty good amount of funding,” Diers said.

Diers said that without the funding source the city would be relegated to using general obligation tax dollars and street assessments to conduct what would ultimately be fewer and smaller projects.

Although Charles City has used the local option sales tax solely for street repairs for the last 20 years, the tax can be approved by the voters for any legal public purpose.

“We can set it up to be for whatever we, or whatever the voters, want it to be,” Diers said. “You can divide this up however you want.”

Diers said that a portion of the tax could be dedicated to city hall improvement, or a recreation facility, or for a new swimming pool, if that’s what the council and the public wanted to use it for.

There was some discussion about using a portion of the funding under the general purpose of “community betterment,” which would allow the city to put the funds anywhere they are deemed necessary.

“Ultimately, the voters have to approve it, so you want to put it toward something that’s responsible, that the majority of the community would be supportive of,” Diers said. He added that street projects are always popular, because they’re close to home and people can see where their tax money is going.

The soonest the renewal of the tax would be on the ballot would be in the spring of 2022, Diers said.

Council member Jerry Joerger recommended forming a committee to examine all options by the fall of this year. Diers suggested it would be better to start sooner than that. Most of the council members agreed with Diers.