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Farm Bureau cites position on sales tax

By Staff | Aug 20, 2008

Discussion of the pending local option sales tax special election dominated the Aug. 12 Emmet County Farm Bureau Board meeting.

The LOST special election is Tuesday, Aug. 26. This special election will be held countywide except for in the cities of Armstrong and Ringsted (which already have the LOST).

The Emmet County unincorporated (rural areas) ballot calls for the imposition of 1 percent tax of local sales and services to become effective Jan. 1, 2009. The ballot also spells out that the distribution should be 50 percent to be allocated to the Rural Services Fund, and 50 percent to be allocated for new and continuing county betterment programs and services.

According to estimates from the Iowa Department of Revenue, if all jurisdictions approve the tax, LOST collections would be $879,823, of which the unincorporated areas would receive approximately 32 percent or about $290,000 per year, the city of Estherville would receive 53 percent or about $470,000 of which their ballot states would be split 40 percent for city services and 60 percent for community betterment. Dolliver would receive approximately $5,000, Gruver $7,000 and Wallingford $14,000.

The cities of Ringsted and Armstrong, who already collect LOST would lose money compared to what they receive now.

By the Local Option Tax Distribution Formula from the Iowa Department of Revenue, LOST is distributed according to population and evaluations of property. The unincorporated areas of Emmet County have 23.5 percent of the population of the county and pay 63 percent of the property taxes collected by the county. The city of Estherville has 60 percent of the population of the county, and pay 31 percent of the property taxes collected by the county (however they also pay city taxes for services provided by city government). The other portion of the population and taxes collected are from the five other cities or incorporated areas in the county. It should be noted that residents of Emmet County’s cities do not pay into the rural services fund. This fund is paid for by rural property owners, and provide money for such services as road and bridge maintenance, sheriff department, libraries, and fire departments.

After a lengthy discussion, where much information regarding the distribution of the LOST to the unincorporated areas was brought forth, a motion was approved that stated “The Emmet County Farm Bureau Board of Directors opposes the 1 percent LOST in the unincorporated areas of Emmet County so as to have the county supervisors rewrite the ballot so that 100 percent of the LOST earmarked for distribution in the unincorporated areas will be spent in the unincorporated areas.”

The motion was then passed unanimously by all present.

Much of the discussion regarding the distribution had to do with the 50 percent that was being called “county betterment.” The board felt that the 50 percent or about $150,000 that is labeled as “county betterment” is nothing more than a “discretionary fund” for the county supervisors to spend as they wish. One of the points of discussion was the fact that the cities of Armstrong and Ringsted would stand to lose about $102,000 and $46,000, respectively.

The county supervisors have stated that they would be willing to spend the “county betterment” portion of the unincorporated distribution to help these cities overcome budget shortfalls. Those are dollars that are earmarked for use in the unincorporated areas that will not be used to repair and/or replace roads and bridges in Emmet County.

The Emmet County supervisors have already earmarked portions of the “county betterment” money to form a housing trust fund in order to provide a means to help fund home improvements. It has also been suggested that the money earmarked for “county betterment” could go into a revolving loan fund and groups could apply for funding, which would allow the board of supervisors to control the funding.

The board questions if this is the best use of tax dollars when the county continues to claim they do not have the money to keep county roads in usable conditions or the funds to eradicate weeds in the ditches along county roads?

The ultimate goal of opposing the LOST by the Farm Bureau Board is, if it passes in Estherville and fails in the unincorporated areas, the residents then have the option to petition the county board of supervisors to rewrite the ballot and call for another election.

The board concurred that the tax dollars to be distributed in the unincorporated areas should be spent in the unincorporated areas and the petition would be written with that intent.

If it fails in Estherville and the unincorporated areas, they felt there would no reason to petition the board. To petition the supervisors would require, according Iowa code section 423B.1, 5 percent of the persons in the whole county who voted in the last preceding state general election.

The supervisors also have the option if it passes in all jurisdictions to to request the county commissioner of election to hold a election in the unincorporated area on the question of the change in the use of local sales and services tax revenue.

The Emmet County Farm Bureau Board encourages its members to vote ‘No’ on the LOST on Aug. 26.

The Farm Bureau stresses that it is the policy of the organization and its members that government needs to reduce its reliance on property taxes. The Farm Bureau supports the idea of the LOST, however do not agree with the distribution of the unincorporated areas portion of the tax as written on the ballot.

The directors believe it is time that all governmental, be the local, state or federal take tax reform seriously. Reform can be obtained by simplification, reducing administrative cost, and establishing limits for state and local spending authority. School, county, state and federal governments must continue to find ways to control spending.