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Tax talk dominates

By Staff | May 21, 2008

The City of Armstrong found a sympathetic ear with the Emmet County Board of supervisors Tuesday when representatives pointed out that the city would lose $100,000 a year if the rest of the county passes a local option sales tax.

Mayor Marv Dailey and Councilman Don Leach said the city would lose 10 percent of its budgeted receipts.

“The cities of Armstrong and Ringsted currently collect $246,707 and we share that amount,” a prepared statement by the City of Armstrong stated. “We keep what we collect. Based on estimates we collect 28 percent of the total of $890,425 but will only receive 11 percent of the total.”

Since 1997, Armstrong has received about $170,000 yearly in sales tax receipts, the total amount it has collected. Those funds have been allocated to the city library, senior citizens, parks and recreation, law enforcement, and street improvements. The city has committed to a new city pool which should be completed early this summer and to a storm sewer project, both of which will be partly repaid through sales tax receipts.

A formula determined by the Iowa Department of Revenue distributes sales tax receipts on the basis of population and valuation, factors that go against Armstrong’s favor.

“We don’t know where we’re going to cut,” Dailey said. “You can spend your money the way you want to” he said of larger municipalities.

Supervisor Ron Smith said if everyone in Emmet County had approved the extra penny local sales tax in 1997 that Armstrong would not have become used to having the added revenue.

“Everything we’ve collected is what we’ve collected in the two communities,” Dailey said. If the issue passes in Estherville and Emmet County, he said Armstrong would be asking for some of the proceeds to offset its losses.

While Armstrong and Ringsted cannot vote on the local option sales tax which is slated for an Aug. 26 election, those communities would benefit if the tax did not pass in the unincorporated area. Armstrong would receive an additional $34,000.

Supervisor Jim Jenson said rural people are already paying the local option sales tax when they shop in towns that have it. He said he would not have a problem reimbursing Armstrong and Ringsted for their losses the first year.

Dailey said it was not fair that Estherville would be receiving an estimated $485,000 from the tax while Armstrong would lose $100,000.

“They’ve made commitments based on this and we need to see them through this,” said Chair Alan Madden.

Dailey said if Armstrong rescinded its tax, Estherville would lose more than $100,000. “They didn’t give us a windfall,” Dailey said. “They gave us what was ours. And now they’re going to take what was ours.”

“We certainly empathize with your perspective,” Madden said.

If the unincorporated areas of the county vote for the tax, it would generate $300,000, half of which would go for rural services. That was the decision that the supervisors made in determining the ballot language for the local option sales tax later during Tuesday’s meeting. That allocation would be for taxes going to rural areas. City governments throughout the county determine the ballot language for how the tax money will be spent in their respective areas.

Opinions varied among the supervisors as to where the money should be spent on the tax going toward rural areas.

“Fifty-fifty’s fine with me,” Madden said.

Supervisor Roger Anderson agreed.

Madden said the 50 percent going toward rural services could be for tax stabilization. Madden said if the ballot language dedicated 60 percent to community development and 40 percent to rural services that it would be a death knell in rural areas.

“The nuts and bolts of this is what’s going to be palatable to the voter,” Madden said.

“At least 50 percent of this has to go to rural services for me to vote for it,” Supervisor Jim Jenson said.

With some supervisors favoring 60 percent for community development and 40 percent for rural services, and others favoring a reverse percentage, the board decided to split the difference and unanimously approved 50 percent going to county betterment projects and 50 percent to rural services.