MINUTES OF THE INFORMAL MEETING OF THE JOHNSON COUNTY BOARD OF SUPERVISORS:
FEBRUARY 18, 2009
TABLE OF CONTENTS
Page
Discussion: Proposed Sales Tax Issue
Discussion: Johnson County Strategic Plan
Chairperson Neuzil called the Johnson County Board of Supervisors to order in the Johnson County Administration Building at 9:01 a.m. Members present were: Pat Harney, Larry Meyers, Terrence Neuzil, Sally Stutsman, and Rod Sullivan.
County Auditor Tom Slockett said he talked to the various cities, department heads, and the Board about the proposed sales tax. He said most of the information he has obtained is from the Iowa Department of Revenue, which has a wealth of information on their website. Stutsman clarified that Iowa City and Coralville are going to put this on the ballot. She asked if Johnson County is required to put the proposed sales tax on the ballot. Slockett said no, Coralville is not required either.
Slockett said the law states that when the jurisdiction/s that represent over half the population in a county files a request with the Auditor's Office to put it on the ballot, an election is called. Since Iowa City is over 50%, when they notify the Auditor's Office, it is on the ballot and no one can stop it. Iowa City has to notify Slockett by 5:00 p.m. on March 10, 2009, to get on the May ballot. As soon as that happens, the rest of the jurisdictions have to opportunity to set their own ballot language.
Slockett said the jurisdictions can determine what percent is going to be used for property tax usage. He said the Administrative Code sections are very specific. The Code states "The city councils and supervisors shall provide the county commissioner the following information to be included in the notice and on the ballots: one, state the rate of tax." He said if it is one percent it has to be stated so. All Iowa counties and cities that have tax a sales tax are at 1% except for Webster County and Mason City, which are at .5%. "Two, the date the tax will be imposed." The tax will be imposed on July 1, 2009. He said section 423 B.6 states "the tax must be imposed at least 90 days after the date of the election." Slockett said a lot of the information is outdated because of the special legislation, Senate File 44, which changed timelines. "Three, the approximate amount of local option sales tax revenues that will be used for property tax relief in the jurisdictions must be stated." He said in most instances that has been stated by percent. "Four, a statement is needed of specific purposes other than property tax relief for which revenues will be expended in the jurisdiction." This is made very user friendly for the cities, which is an opportunity for the Board to state uses and recommend an amount for property tax deduction. Slockett read "if a jurisdiction fails to provide the information above the following information shall be substituted in the notice and on the ballot: 0% for property tax relief, the specific purpose for which the revenues will otherwise be expended is any lawful purpose of the city or county". That demonstrates that once Iowa City calls the election every city and the unincorporated area will have a ballot. He said the Council or Board will have the ability to set the ballot. If the Council or Board chooses not to set their ballot, it will be set for them
Stutsman clarified Johnson County does not have a choice whether to have to unincorporated area vote for the local option sale's tax. Slockett said they will vote. As soon as Iowa City puts it on the ballot, everyone in the County votes. West Branch is part in Johnson County and part in Cedar County. If Cedar County does nothing the Johnson County portion of West Branch will vote on it. They will be treated as a small city on the Johnson County side of the Border. Slockett said West Branch will receive revenues for 85 people recognized by the Census.
Slockett said Cedar County can also put a local option sales tax on the ballot, because they are one of the 87 counties with Presidential Disaster Declarations. Only those counties are eligible are for this expedited vote. He said based on his information, Cedar County probably is not going to put it on their ballot. If Cedar County decides to do the tax there is an opportunity for West Branch to vote as one city with an agreement between the Johnson County Board of Supervisors and Cedar County Board of Supervisors as to how the funds will be distributed.
Slockett said information on the local option sales tax can be found on the Iowa Department of Revenue website under the local government section. He said there is a link to a map of Iowa, effective January 1, 2009. On the map there is a mass of color representing Johnson County where there is no sales tax in any jurisdiction. He said there are 21 cities and unincorporated areas with the tax. Nine cities have LOSST, the local option sales and services tax, but the unincorporated area does not have it. He said 69 counties have the entire county, including the unincorporated area. The color is rough because for example Black Hawk County is shown as a county with only a number of cities and the unincorporated area. Slockett said the website includes the local option sales tax list by city and local option sales tax list by county. He said Black Hawk has imposed the tax in every city and rural area except Jesup, who voted against it. Stutsman asked if Jesup does not receive any revenue, because they do not pay the tax. Slockett said Jessup does not get any revenue. The major cities in Iowa that do not have the local option sales tax at this time are Iowa City, Cedar Rapids, and Des Moines. Almost every other large city does. He said it is not known what will happen with the Linn County election.
Slockett said he is against local option taxes because of the problems with tax avoidance. People will drive across borders in order to avoid it. He is also against regressive taxes. Slockett said www.iowapolicyproject.org has information on budget and taxes and demographics on who pays Iowa taxes. For sales and excised taxes the lowest income people pay 7.3% of their income and the highest earning people pay 1.1% of their income in sales taxes. This takes into account that the tax will not be on food and prescription medicine. It is still the most regressive tax. Property taxes are also regressive. The poorest people pay 2.8% and people don’t realize that renters pay property taxes. They pay it in the products they buy and in their living quarters. Renters do not get the homestead exemption for their housing. Slockett said the wealthiest people, earning $831,100 or more, pay just 1.9% in property tax. The income tax is progressive with the poorest people paying .04% of their income in income taxes. The top 1% of the income scale pay 4.7%. Harney said he understands that income is the most even tax that could be in place. He said when at comparing individuals making $20,000 a year versus $100,000 a year, the lower income individual probably will not spend as much on food and clothing. He said it probably averages about the same or a little more for the higher income individual.
Slockett said Johnson County is a destination city. People living in the county may be paying more regressive taxes than property taxes, but there are more people helping to pay the regressive tax because of the visitors to the county. He said Hawkeye Football fans, people visiting the University of Iowa Hospitals, the Coralville Reservoir or the University of Iowa, and the tourists or patrons of downtown or the malls all contribute to the taxes. Slockett said if those visitors were to go to Davenport, Mason City or Ames they pay. R. Sullivan said there are also a lot of absentee landlords that do not pay it, for example General Growth. He said the landlords would pay property tax, but if it is a sales tax, they will not. Slockett said every penny a person spends on products in the county are taxed. Sullivan said there is a trade between the groups of people when talking about absentee or visitors. Stutsman said income tax would be based on where people live. Sullivan said they are talking about sales taxes. Stutsman said General Growth probably wouldn't pay income tax income tax anyway. R. Sullivan probably not. He said there is a shift; for example, the people that own the buildings in downtown Iowa City that live in Chicago. Stutsman said there is no equitable way to tax. Harney said the people Sullivan mentioned are paying the property taxes. R. Sullivan said if they are going to pick and choose a tax, the worst one they can pick is the sales tax. Stutsman said it is not up to the Board, the Iowa City City Council has picked it.
Meyers clarified, if Iowa City votes to put this on the ballot, everyone in the county votes. Slockett said everyone goes to the polls in the county. Meyers said as for as deciding if it is on the ballot the Johnson County has no voice as to whether it gets on the ballot or not. Slockett said there is no choice; the County will get to pick the ballot language. It is easier for other entities, because they don’t have to pass a resolution placing it on the ballot. All the entities have to do is create ballot language.
Slockett showed the board, on the Iowa Department of Revenue website there is a link for local option distribution planning information, which is available to the general public. He said the link lists all the counties and shows the measures that determine how the tax is distributed. The measures are population of the county and three years of property tax levies. They problem is that the information on the website is drastically outdated, but it does give some relative information. Slockett said the Code states 25% weight goes to the property tax levies and 75% goes to the population of the area and then the distribution percentage is determined. He said the website can calculate the amount the will be distributed to each entity. He said the Iowa Department of Revenue estimates that collection for sales tax will be $18,215,635. To be cautious, due to the economy, the Department of Revenue has been using 95% for the estimated distribution. Using the 95% distribution, the collections would be $17,304,853. Slockett said if each jurisdiction passed the local option sales tax, Coralville would get $2.4 million, Iowa City would get $9.2 million, and the unincorporated area of the county would get $3.9 million at 95% or $4.1 million at 100%. Harney asked those figures would be collected over what time period. Slockett said one year. He said the website allows people see how the distribution will work based on their estimates of the results of the vote.
Slockett said the website also has information on how much each jurisdiction in Iowa received for schools. He said there is a state-wide school sales tax that can be used as an estimate for what amounts will be. The Census information is from the State Library and the revised 2000 Census was recertified by the Secretary of State. The tax information comes from the Iowa Department of Revenue website. These are estimates of what will be received.
Slockett said, at the last Finance Committee Meeting Neuzil asked what would happen if the local option sales tax only passes in some places, and those places decided they do not want the tax because it did not pass in the next community. It used to be there was a contiguous rule, meaning all cities that touched each other voted as a unit. Now for example, if it passed in Tiffin and not Coralville, and Tiffin wouldn’t want everyone going to the mall to avoid paying the tax. The law is written so the sales tax can be easily removed, but communities are stuck with it for one year. After one year the City Council can vote to ask the Board of Supervisors to remove it and the Board is required to do so. When it passes the Board of Supervisors initiates the tax. Harney asked if the Board could remove the tax without a vote. Slockett said yes without a vote, if the City Council notifies the Board to take the tax off the Board is required to do so, the same way the Board is required to impose the tax if it passes.
R. Sullivan said Marion passed a resolution that if the sales tax failed in Cedar Rapids but passed in Marion, then Marion would rescind it. Slockett said they can only do that after a year. It may be a big worry for their citizens, so Marion is trying to reassure them. R. Sullivan said he thinks they are trying to maintain a level playing field, if Cedar Rapids has it and they pass it, fine. Slockett said the deadline is March 10, 2009, and after that they will know if it will be on the ballot. March 3, 2009, is when Cedar Rapids is voting. Stutsman asked if the Board has until March 10, 2009, to come up with language. Slockett said yes, March 10, 2009, at 5 p.m. Neuzil said the Board needs to discuss the sales tax proposal. He said Iowa City City Clerk Marian Karr anticipated that Wednesday February 25, 2009, the Commissioner of Elections would receive notification from the City of Iowa City it has called for election. Notice would then be given to the Board to establish the sunset and ballot language for the unincorporated areas.
Stutsman asked who establishes the sunset. Neuzil said the County does. Slockett said the Board has authority over the sunset, because the County establishes the sunset. He said the Board could override what an individual city wanted. An individual city can request a sunset and the Board can set different sunsets for each city. The Board could impose one set for everyone or no sunset. Neuzil said the City of Iowa City will have discussion and potential vote on February 24, 2009 and after that the Board will have direction from the City. He said after looking at reports from Iowa City, it did not seem that there is unanimous agreement on the sales tax issue ,which is something the City Council will have to work out. Harney asked if the cities pick up the cost of the election. Slockett said the cost is divided.
Neuzil said as a Board they need to decide on either February 26, 2009, or March 3, 2009, the sunset for the sales tax proposal and have the ballot language ready. Stutsman said she will not be at the Board Meeting on March 3, 2009. Neuzil said then February 26, 2009, will likely be the time they will establish that. The goal right now is to have discussion today about where the Board would like to go. He said the Board can have further discussion at the informal meeting on February 19, 2009, and then vote on February 26, 2009, as long as the City of Iowa City has forwarded the request. Slockett said one city has already sent in ballot language and he requested an opinion from the Secretary of States Office because it has not yet been put on the ballot. He said if the Secretary of States Office gives the green light, the Board would not have to wait until they are notified. Neuzil said the Board could probably put it in their resolution. Stutsman asked why. Slockett said the City is pretty sure the tax is coming up and they are setting up for an election that has not been called yet. Stutsman said clarified it is just the process.
Harney said he would like to have input from cities about their plans for the sunset. He said a three year sunset versus a five year sunset is a big difference. He said the cities have talked about a five year sunset. He said for the County, a three year sunset is a better fit. Stutsman said Slockett said the Board could set it different for each entity. Slockett said the Board could, but there is the question of entities wanting the tax to be the same to avoid citizens driving to other places. He said there were concerns about sales tax when purchasing vehicles, however there is no sales tax on cars. Neuzil said the Board will have to release information about what will be taxed.
Neuzil said Iowa City already had discussion about where to designate revenue dollars from the tax, but has not had an official vote. He said 100% of the revenues would be used for flood related issues. He said the projects Iowa City has identified are Park Avenue Bridge, North Dubuque Street, and their sewer issue.
Slockett said he sent a list of the all the legal purposes from the budget materials filed with the State. He said he was Auditor when the sales tax was voted on in 1987 and 1999 and it failed both times. He said in those instances Iowa City over-thought the ballot language. He said in 1987 the City officials went to all of the service clubs in the county proclaiming there would be a $1 million deficit in the City budget. No one believed it, they voted it down, and the deficit disappeared. In 1999, the City put the most popular function in Iowa City government as the main purpose for sales tax on the ballot, building a new library. They argued the City wanted a new library and a property tax measure would never pass. If the citizens wanted a new library, they are going to have to vote for the sales tax. Nobody believed that, so they voted it down two to one, losing every precinct in the County. Slockett said the City Council put on a library Bond issue and it passed overwhelmingly.
Slockett said even if the tax is proposed to answer a want in the community, it wouldn’t necessarily pass. He said, if the City had uses for flood recovery, those are good explanations, since property taxes are not available for that purpose. He said he thinks the best arguments are that the City is having an emergency due to the flood. Floods cause the creeks and rivers rise and the City need’s to complete a lot of road and bridge repairs. There is also a world financial crisis, which has hit the county very hard and may be long lasting. One reason to do the sales tax is because the financial crisis caused by housing, which is what the County depends on for property taxes. If there is anything that is uncertain in the financial crises it is the housing market and the valuations of properties. The County is the safety net and that needs to be funded regardless of the financial crisis. The Board has to decide if the financial crisis is causing emergency in the County. If so, there is a need to start working on this tax issue. If there is more than one source of tax income the Board can blunt excesses in one area.
Slockett said it is not known what would happen if there was a crises in the residential housing market and there has been a lot of concern about commercial property taxes. If the County had another source of income, they can try to hold back those property taxes. Because of reevaluations and the productivity of corn, there have been large rural property taxes. The Board has worked to try to move funds and expenses around to try to not have sudden changes in those taxes. The Board would have a lot more flexibility to do that if there were other sources of taxes. There are good reasons to impose the sales tax and the Board has to give those reasons.
Slockett said people’s views on the needs of the County need to be taken seriously. He said the tax needs to be proposed for serious reasons. He thinks people will respect those reasons and think them over. He doesn’t know how the people will vote. He thinks if it is voted down in Linn County, then it would be harder for people to accept in Johnson County. It has been voted down overwhelmingly twice in the past. He doesn’t think the same old reasons will work. Stutsman said the economy has changed drastically since the last time they voted.
Neuzil said they have good background as far as the fact that the City of Iowa City will likely be making a request in the next week. The Board has background on the amount of dollars generated. The anticipated amount for the unincorporated area is between $3.9 and $4.1 million. There is timeline for the Board, if the request from Iowa City is received, and there will be discussion today and on February 19, 2009, and a formal vote to determine ballot language on February 26, 2009. At that time the Board would also determine a sunset. The Board needs to have discussion about where the unincorporated dollars would go. He said the Board would have to have a vote to determine where those dollars would go. There was discussion by the Finance Committee about different options. An option that was explored more than any other was a proposal that the Board has seen now that has to do with the projected $4 million and where those dollars should go.
Neuzil said one thought was to use the dollars as 100% property tax relief, instead of spending any of the dollars for the unincorporated area. He said County Budget Coordinator Rich Claiborne provided analysis on what that impact would have been this year if the Board would have been able to take $4 million off property taxes. He said the analysis showed significant tax decreases. Stutsman clarified these dollars cannot be used for Mental Health/Disability Services. Slockett said that is not known. He said ISAC thinks that arguably property taxes are limited. He said the law was before sales taxes came into play. He said ISAC suggested working with State Legislators to clarify that in the law and that the Board should get an opinion from County Attorney Janet Lyness and put it on the ballot. Having the use on the ballot would improve the case. He said the Governor proposed significant cuts to mental health reimbursements, which causes additional waiting lists in counties.
Neuzil said there are different ways to spend this money; either 100% would be used for tax relief, it could be used for the Justice Center or for another operation. There are three arguments. One argues the money should be used for a particular infrastructure project, so it is not a part of operating expenses. Another argument says it should be put towards an operating expense such as MH/DS or salt and sand, which may not be fair because only the unincorporated dollars would be used to benefit everyone in the County. Stutsman said a big consideration for her is what will pass in the rural areas. She said the Board has to be honest about what rural voters will vote for. She said she and Harney are meeting with the Farm Bureau on February 23, 2009, and the Bureau has good knowledge on the views of the rural voters. She said the Bureau may not be in favor of the sales tax. She said the argument for the benefits of the tax for the unincorporated area is that there are not many businesses that would have to pay the tax, but the area would benefit from the tax in Iowa City and Coralville. She said on the other hand most of the residents do most of their shopping in Iowa City or Coralville, so they are contributing in that way.
Neuzil said the Finance Committee also discussed the length of the sunset. He said the Committee identified the top issue for Johnson County is the Justice Center. The Finance Committee also considered that the longer the sales tax goes on the longer it is going be before a request can be made to the taxpayers for a Justice Center. He said the question is if they want to wait longer than three, four, or five years to help pay for a Justice Center, which at that point will be beyond today’s cost estimates. One thought was to look at giving the sales tax a three year sunset. They had discussion with County Assessor Bill Greazel about the timetable of things and that it would be better if Iowa City, Coralville, Johnson County, and the area communities identified major infrastructure projects for the entire county and then prioritize them.
Neuzil said the thought is to give the tax a three year sunset and in that three year period start the process of getting together as a community and start prioritizing each entity’s priority. He said he thinks the Justice Center will rise as the top priority. Collaborating would give opportunity for dialogue on the Justice Center issue. Harney said the need for the Justice Center is the reason he advocated for a three year sunset. He said there are four different places the County could look at putting sales tax dollars towards. One is roads, because there are road problems and a desperate need for improvements. He said County Engineer Greg Parker has cut into his reserves. He said it is up to the County to take care of those particular bridges and roads. Johnson County is getting some stimulus money, but it is not a very large amount when compared to what the State is receiving. He said the State is taking 2/3 of the stimulus money.
Harney said there is a possibility of using sales tax money for Mental Health services. He said he wants to help the individuals with mental health issues, but he has a problem when the State is taking that money away and telling the counties to pick it up. The State still has a certain amount of responsibility to keep funds flowing to the communities. Harney said he agrees with Neuzil on the Justice Center. He said if a portion of the tax dollars is taken to look at different possible locations for the Justice Center, all of the communities would have to agree to let those dollars be used in that way.
Harney said the other issue is property tax relief. He said the issue with property tax relief is the uncertainty of what happens after the sunset and property taxes skyrocket. He said the County will be thrust back into the same situation it is currently facing. He said some of the sales tax money needs to go to property tax relief. Stutsman said the Board can put percentages on the ballot and maybe they could calculate the rural taxpayer's percentage of cost for the Justice Center. The Board can determine that rural tax dollars will pay for 25% of the Justice Center compared to other cities will contribution. She said supposedly the County is getting less dollars from the fuel tax. If Legislature increases the fuel tax the rural taxpayer could argue gas is more expensive and the local option sales tax will go towards that, too.
Harney said the formula for the fuel tax is that the State gets 50%, cities get 25% and the counties get 25%. Stutsman said every citizen still pays for that. Harney agreed. Stutsman said one of her issues with the Justice Center is that the community has not been asked if they want to build a Justice Center. She wondered what kind of community backlash the County would receive, because they have not had the option to weigh in on the issue before dollars are put toward it. Slockett said they have kind of asked the community. That needs to be kept in mind if they want the local option sales tax to pass. Allocating profits toward the jail could be very unpopular.
Meyers said he agreed with Slockett. He said the Board has to be careful about the listed uses for the money. If something is listed that does not interest the rural residents they are going to vote against it. Stutsman said residents are going to ask themselves what is in it for them. Meyers said roads would be something residents would be interested in. He thinks the stimulus program is going to help relieve some of the County road problems. Property tax relief might also be popular but he concerned about the spike after the three year sunset to return to a normal cash flow. Stutsman said it would have to be carefully laid out and explained. Meyers said with the Justice Center there would not be much day to day changes in expenses as far property taxes. He said the County would be setting aside a pool of money to help offset costs. He agreed that the Board has not asked how interested residents are in a new county jail. Stutsman said they also haven’t asked about a justice center. The Board has weighed in on a justice center, but the community has not. There are still a lot of unanswered questions.
Slockett said, if the Board is considering different sunsets, it is important to keep in mind that if for example Johnson County has a quicker sunset than Iowa City, the City is the only entity that can vote for it to be put on the ballot again. Neuzil said the Board is considering one sunset for everyone in the County. He does not think there could be a worse time to put a sales tax in front of people. If he had to make a decision right now, it would be to put it all towards property tax relief. He said Iowa City is forcing this on the County and if the Board has to implement this, it would be best to put it toward property tax relief. Property taxes would spike some after three years, but he thinks people would appreciate three years of less taxes from the County's perspective. He also likes the three year proposal, because it would give opportunity for dialogue and explain to the community that the Jail is a major issue in this community. He said the Jail is too small and the Courthouse facility is not secure enough. He said those types of things can be done in a three year period as the Board continues to work on space and location analysis, continues to acquire pieces of property, and works with the GSA. All of those things will have to take place at some point.
Neuzil said they are not going to be able to build a justice center with the economy right now. Being realistic, the Board is not going to be able to come up with $60 million for a project right now. Slockett urged the Board to give themselves as much flexibility with this funding as possible, should it pass. The Board should sell it realistically to the Farm Bureau and others. He said that way the Board will not be locking themselves into a certain usage. He suggested the Board talk to people in Story County and Blackhawk County. These uses that lock people in seem like a good idea today, but maybe in three years there is a real need elsewhere. Slockett said the Board might agree it should be for something else then start to try to figure out ways to do funding transfers, which would lead them to Court. There has been a lot of contentiousness to this, court battles and decisions, because of restricted uses placed on ballots.
Stutsman said she understands the need for flexibility and wants to find out how flexible the Board can be. She said taxpayers get upset about that, because they don’t know what the money is being spent on. She said she would like the money to go toward property tax relief and the roads and bridges. Slockett said there are a certain number of people who will argue the Board is placing taxes that tax the poor many times over and taking off taxes that are fairer. Neuzil said the Board are not the ones placing the taxes. Slockett said it is going to be on the ballot. R. Sullivan said the Board would do it, if they do property tax relief. If the County did a new project, it would be paid for in maybe a less fair manner, but it would still be a new project. If the Board does property tax relief, then property taxes are going down some places and increasing in other locations. Slockett said the more flexibility the better. He said that the County is in an emergency and it is not sure how the money is going to be needed. He said the Board would like to evaluate the need on an ongoing basis for the best way to evaluate these funds. It might not work but coming up with specific uses hasn’t worked in the past either.
Meyers said he agrees with Stutsman that if they ask for a sales tax increase for a vague reason a lot of issues will come up. Neuzil said, if they stick with their time line, the Board will have language for the discussion for the February 19, 2009, informal meeting. Harney said another issue on the property tax side is the homestead exemptions. The State is starting at 70% and it is not known if that is going to drop. That is another tax citizens won't get full credit on. He felt some of the sales tax revenue should go toward property tax relief, because once the bonds are paid off, there will be less of a spike in taxes. He said the Communications Center bond will be the on bond not paid off in five years. He said the Board should look at allocating money to roads and bridges and property tax relief.
Slockett said roads and bridges for the unincorporated area would be very popular and fairly uncontroversial. Stutsman said there are a lot of farm people in the unincorporated areas. She said the Board is heading for a perfect storm with the farmers because grain prices, which are tied to productivity, were up for a long time. Grain prices are not up now, but input costs are way. She said maybe the sales tax would be a good opportunity to give relief to the farm community. Harney said they are talking about the richest of the rich or the poorest of the poor, but there is a huge number of the population in between that would benefit from a tax relief.
R. Sullivan said there are people who benefit and they are all people who come in and complain and talk. The people that would be hurt by the sales tax do not come in and talk to the Board. He stated usually, there is never a person making under $20,000 standing at the microphone to ask for anything. Stutsman said she understands R. Sullivan’s arguments, but thinks they are past that because Iowa City is going to put it on the ballot. R. Sullivan said he is against a sales tax period and is going to vote no. He said he has to consider the least objectionable option and to him, property tax relief is the most objectionable option. Property tax relief moves the tax burden from people with more money to people with less money. He thinks if the Board say put all the sales tax revenues towards roads and bridges the County is at least getting some projects out of it.
Meyers said it would be interesting to know how much sales tax income is generated by Coral Ridge Mall. Looking at the license plates there is a huge percentage of out of county plates. If the mall alone generated a substantial portion of the property tax, it would somewhat negate R. Sullivan's argument. R. Sullivan said he spoke with University of Iowa Urban and Regional Planning Professor Peter Fischer about this issue. R. Sullivan said Fisher told him that the people at the mall are examples of out of county people paying sales tax, but those people do not make up for the out of county land owners, for example General Growth. R. Sullivan said there are a lot of out of county property owners. There are a lot of deeds to property that do not say Hills, Iowa but instead Chicago, Illinois or Los Angles, California or Denver, Colorado. Meyers said those out of county owners would be getting property tax relief. R. Sullivan said yes. Meyers asked if tax relief could be designated as residential property tax relief only.
Stutsman said General Growth would not receive property tax relief, because they are not in the unincorporated area. She a lot of General Growth is in Coralville. Meyers asked if the Board could designate it for rural property owners. Neuzil said Claiborne identified it as taking money out of the General Supplemental Fund, so it would be for everybody. Stutsman asked it they could designate it only for the Rural Fund. Neuzil said he thinks they could. Slockett said the Board can designate it from the Rural Fund, because one of the litigations states that as a possibility. Neuzil said it seems appropriate that the unincorporated residents see the property tax relief, if the Board chose to go that route. Meyers said each jurisdiction is not going to share revenues. Coralville will designate revenues specifically to their projects and Iowa City will do that same.
Stutsman said some entities are hoping it does not pass in other places to get a bigger share of the profits. Harney said this sales tax could not have come at a worse time because of the economy and he wanted to establish a penny sales tax overall for the Justice Center. He thinks the Board could debate this all day. Places like Proctor and Gamble and other large business in the community are the job providers, which contributes to housing. He wants to protect those that can least afford it, but it's democracy. R. Sullivan said he is not willing to say they can’t protect those people. Stutsman said they established early on there is no equitable, fair, or easy way to do this. Somebody is going to come up short no matter what the Board does. The Board has to decide what benefits the general good the most and go from there. Harney said he agrees with R. Sullivan. He wants to support the poor as well and the Board provides a lot of extra services to the best of their ability.
Neuzil said the Board first needs to discuss the sunset. Iowa City is going to propose a five year sunset and try to match that with Cedar Rapids and Linn County. He argued that a three year sunset is an opportunity to identify projects as a community and determine how they are going to come up with the dollars necessary to deal with the infrastructure. Neuzil said he is in favor of a three year sunset. Harney said he understands the Board is setting the length of time for the County. He said he didn’t realize they set it for the entire ballot for three or five years. R. Sullivan said the Board sets it for everybody in the county.
Slockett said the Board has the option to set it individually too. Harney said that is why he wanted to hear from the cities if three years would be an option. He thinks it would be in the County's best interest to do a three year sunset. If the cities are going to have a five year sunset then the Board should go with that. Neuzil asked if Harney wanted to keep it at five. Harney said only if the other communities are going to have it at five, otherwise he would like to see it at three. Neuzil they are anticipating the communities to come in with a request for five years. The Board can set it wherever they want. Meyers asked if there is a maximum number of years. Slockett said there is a minimum of one year and no maximum. Harney said he would like to go to a three year and if the voters decide they want to add on to it, they may. Neuzil said a three year sunset would give people the opportunity to add years as needed.
Stutsman asked if the sales tax would be available to renew under the current legislation. She said the legislation just dealt with an expedited vote. Slockett said if Iowa City put it on the ballot, it could be voted on again. Stutsman supported the three year sunset. Meyers said his original thought was five, but he likes the argument for three. R. Sullivan said he is not in favor of it but he thinks it is crazy to think of any number of time until they have heard from those cities. Why substitute the Board's judgment for the judgment of the cities. If cities say projects are going to take five years and the Board sets a three year sunset, it is pretty pointless to vote for it. If they want this to pass, he thinks the Board has to reflect what the cities want. R. Sullivan said he is for one year.
Harney agreed with R. Sullivan. He said he wanted to hear from those cities. He said this issue keeps growing. If cities are going to take the five year tax to raise Dubuque Street and put up walls, it will leave the rural residential area to the north of the county in the flood plains. Neuzil said all they can do right now is come to some consensus about how to move forward. R. Sullivan said if they want it to pass having different dates is a reason for people to go, too confusing, no. If there is one time frame voters can consider it. Stutsman said she thought the Board set the sunset for everybody in the county. Neuzil said they can. R. Sullivan said, if Coralville says it is going to take fie years to pay for their projects, and the Board only sets a three year sunset, then Coralville might say they don’t want to do it.
Neuzil said looking at the projections, the total of the project costs for the projects the cities want to accomplish with the sales tax will take a lot more than five years. Coralville's projects equal $56 million and Iowa City is close to $100 million. Adding up the numbers, that money is not there. If the cities are going to use those dollars to leverage potential federal dollars, they can get 80% matches. Harney said that is why the Board needs to hear if the cities need to have it for five years. Neuzil said cities will need to prioritize better or maybe there should be community dialogue to put issues that are not solely related to Iowa City and Coralville on the list. Slockett said looking at the map there is not a history of those taxes being taken off after the sunset. He thinks for practical purposes what gets put on is going to stay on.
Stutsman said at least the community will weigh in on that. The community will decide after three years whether they want to continue the tax or not. Slockett said there will be another election. County Treasurer Tom Kriz said both Iowa City and Coralville said they want to do a five year sunset. Neuzil said there is a consensus to drop that to three. Harney said until they hear from the cities and he would like to have a conversation. Stutsman said the Board has heard from Neuzil and Kriz that cities want five. Neuzil said from the Board he hears three, one, three, three, and three, so right now their discussion is to keep it at three for now. Those numbers can change, but they are just trying to get to a consensus.
Neuzil asked about the proposals for the use of the sales tax money. He said he suggested 100% for property tax relief. R. Sullivan didn’t want it at all but 100% for roads and bridges, if it had to. Harney wanted 50% for tax relief, 25% Justice Center, and 25% roads and bridges. Harney said that or 50/50 with roads and bridges. If the cities don’t agree to put money towards the Justice Center, he doesn’t want just the rural residents doing it. Neuzil asked Stutsman and Meyers what their thoughts were. Meyers said he would go 50/50 with the roads and property tax relief for rural residents. He likes the jail idea, but he has a problem with it for the same reason as Harney. It means that county residents are putting down a big down payment on something that Iowa City is a major user of. Stutsman said she would go with property tax relief and the roads and bridges. Neuzil asked if she wanted the property tax relief to identify for the unincorporated residents. Stutsman said right, rural fund only.
Neuzil said looking at the Rural Fund levy, he doesn’t know if they get the $4 million. R. Sullivan said it is about $4 million. Meyers asked if rural residents would end up not paying any. Neuzil said they still pay into the General Fund and he doesn't know what that would create. R. Sullivan said Rural Basic is only $3.1 million. Neuzil said they are looking at potentially $4 million. Stutsman said she would look at doing 75/25. Neuzil said that is if it was at 100% and if they went 50%, they could knock off $2 million. Slockett said the Rural Fund goes to the roads, too. Stutsman asked if anyone would be interested in 75 roads and bridges and 25 tax relief. Neuzil said right now if Harney decided not to use the Justice Center, there are three individual who are 50% property tax relief and 50% roads and bridges. Stutsman said she is not set on the percentage yet.
Meyers said before he would go 75% on rural road and bridges he would like to look at Parker's list again and see the dollar amount. It might actually be more money than needed to catch up. Stutsman said $3.9 million might not pay for one big project. Neuzil said they have an understanding, if Harney is alright with changing his. Harney said he is and he wants to hear from the cities. Neuzil said sure and he thinks they all do. They may get into a timing issue, because Iowa City is not going to make this determination until February 24, 2009. He has asked Karr to ask Iowa City come to the Board meeting on February 26, 2009, to make a presentation to the Board. At that time the Board can have the discussion. Stutsman asked about Coralville. Neuzil said they could have all the cities come in, but Iowa City is making the request. Kriz said Coralville Finance Director Teresa Kaeding and City of Iowa City Finance Director Kevin O'Malley were both here. Harney said any of the communities incorporated certainly need a say. Slockett said one thing to keep in mind is that there is a Presidential Election in three years.
Neuzil said the other factor is that in 2010, if the State Legislature moves forward, there will be another sales tax proposal from the State for environmental issues. They passed that last year and they are passing it this year and they will have it ballot ready for a constitutional change. R. Sullivan asked if it was to carve out a portion of the existing. Neuzil said no, he thought it is increasing the sales tax. Stutsman asked if the State has talked about putting another penny on the sales tax, because that comes up. Harney said the State is talking about that and $0.08 on the fuel tax, which the large corporations can write off. Neuzil said the County has a gigantic justice center issues that at some point needs to be funded. Stutsman said they might be further along with their planning for that. R. Sullivan said if they are going to get the cities to buy in, the County will have to start charging to book somebody into the jail. Harney said if the Jail is full, have the cities transport people somewhere else. Meyers said Harney’s argument is interesting.
Neuzil said it is frustrating, because before the flood the next big project was going to be the Justice Center. There are now communities that have identified another source of revenue and now other issues are more important. Stutsman said the other communities view the Justice Center as a County issue. R. Sullivan said if Coralville was asked what the biggest issue for their community is, they would say the Stories Project. Stutsman said asking communities their priorities in the Finance Committee would be a good first step. Inviting the finance people from Iowa City, Coralville, and the School District should be included, to start having joint dialogue about what everyone needs. Everyone is so focused on individual budgets and projects, that they forget their actions impact every taxpayer in Johnson County. The government bodies need to start seeing issues for the whole of Johnson County, not just Iowa City, Coralville, and Tiffin etc.
Harney asked if the proposed budget with tax relief is based on 100% tax relief. Neuzil said it is based on 100% tax relief and taking it out of the General Supplemental Fund. R. Sullivan said Claiborne used 95%. Neuzil said Claiborne used the $ 3.9 million off the top and to show the impact county-wide. Stutsman asked for Claiborne to run the numbers for 50/50 Rural Fund only. Neuzil asked if the Board needs to have a recap conversation February 19, 2009, for the television audience. Stutsman said it is still on the agenda for February 19, 2009, but she thinks there was good discussion today.
Neuzil said the Board has an opportunity during the February 25, 2009, Key Issues meeting to come to a consensus. Then on February 26, 2009, the Board would strive to have the ballot language ready, based on the assumption that Iowa City will move forward with the request. Stutsman asked Slockett to run the figures again for the February 19, 2009, discussion. Slockett asked which figures. Stutsman said the figures Claiborne has done, but this time with 50% tax relief and 50% roads out of the Rural Fund. Then the Board might have something to discuss, if they could get that information.
Neuzil said he doesn’t think it would take much, because $3 million would be taxed out of the Rural Fund and increase 50% for roads and decrease 50% for taxes. Stutsman said she would like to know how much is available for roads. R. Sullivan said the rural property taxes would be halved. Harney asked half of the current budget. R. Sullivan said it would be half of the overall budget, not including cities. Stutsman asked if anyone was interested in having number for 75/25 just for the sake of discussion. R. Sullivan said they could almost eyeball it. Neuzil said it is the calculation of the impact on taxes. Neuzil said all the cities will be communicating ballot language with the Commissioner of Elections. The Board has to determine the sunset at their own amount for the unincorporated area.
Recessed at 10:32 a.m.; reconvened at 10:42 a.m.
Stutsman said this discussion should be put on hold until the Board’s new Executive Assistant is hired. Neuzil disagreed. He said the Board talked about working with Human Resources on a game plan and they can continue on that part of the discussion. He asked if the Board was interested in having the liaisons start that process. Stutsman said yes, policy on a hiring freeze and attrition could be started. R. Sullivan agreed and said when an employee leaves or retires is a good opportunity to look at the personnel needs of each department. He said the other thing the Board needs to do is go through each department's requests and rank those somehow. Stutsman would like to see the Board move towards requiring department heads to make an argument for hiring anytime a new hire is proposed or somebody leaves. She said the Board always honors personnel requests, sometimes without talking to Human Resources Administrator Lora Shramek who has good insight on hiring needs.
R. Sullivan said he would like to see a priority of five positions. What are the five positions the Board would hire, if they could. He said the Board has not discussed hiring priorities. Stutsman said public safety is a given. R. Sullivan said even with public safety there is competition between the Sheriff and the Ambulance. Stutsman said when Ambulance Director Steve Spenler proposed a training coordinator the reason was to make Johnson County Ambulance one of the top in the nation. She said that is a good idea, but the County does not really need that position.
Neuzil said the Ambulance Department has a Strategic Plan. The Board needs to get on other departments to start planning like Ambulance. Stutsman agreed. Neuzil said adding employees should be part of the strategic planning process. Stutsman asked who else does strategic planning besides Ambulance. R. Sullivan said MH/DS and Planning and Zoning can argue they have these plans. Stutsman said MH/DS has a County Management Plan.
Harney said he thinks the term strategic planning scares departments, when really it is just a long term plan. Stutsman said maybe with a new Executive Assistant, the Board can have a mini-course in strategic planning. She said a person's adeptness to long term planning should be considered when hiring the new Executive Assistant. Neuzil said the goal was to have an Executive Assistant who would keep the Board on top of planning. The Board has moved to have meetings every month specifically to get updates about where they were on things. It fell apart in 2007 ago and started coming together in 2008 and the beginning of this year and is now falling apart again.
Stutsman said the Board needs to send a message that strategic planning is a priority and the Board is committed to it. R. Sullivan said it would be nice if the Board laid out five positions that would be hires if they could, then there would not be questions as to who's positions will be filled around budget time. Stutsman said they need to be careful not to send the message, need not apply. Harney said they need to look at each department individually to consider what needs are and how things have changed. He said the Board always questions what is being done with Secondary Roads, because a lot of brush cutting is no longer done nor is a lot of mowing. There are times when snow is blowing, things need to be done. Stutsman said the County may be better off with contracts.
Stutsman said the Board needs to send a message to department heads telling them not to assume that their positions will be rehired. Department heads will need to show how that person can be kept busy. R. Sullivan said department heads will have to demonstrate the need for that person. If the need does not exceed the need for positions on the Board’s list, then the position will be replaced by the one on the list. Neuzil said the Board has a good list that he and Harney can start with Shramek. He said other things can wait until the Executive Assistant is hired.
Harney said he thinks what the Board is doing is great, but he does not want to overload Human Resources with a lot of busy work. Stutsman said she doesn’t think this is busy work. Harney said he understands that, but there are a lot of things she would not necessarily need to do. Neuzil said strategic planning is not new. R. Sullivan said Cedar Rapids cut 300 employees over the last three years. Stutsman said department heads need to be included in the process, because it will be easier to implement if they understand the Board’s decisions. R. Sullivan said if all of the departments follow Steve Spenler’s direction, the department heads will be able to justify their hiring needs. Harney said Secondary Roads is hiring two new positions. Stutsman said Secondary Roads have had retirements. Neuzil said the Board can ask departments what would be cut if they were had one less employee.
Stutsman asked if the Board wanted to implement a hiring freeze now, until they get this done. Harney hoped that the job description study would show that people are not busy as originally thought and if the study does not recommend a raise that the Board can look at cutting those positions. Stutsman said when HR went through reorganization, it seemed like a crisis at first, but everything got taken care of. She said the Board needs to send a message of the County's priorities. The Board should consider if they need to provide some of the services that are not required. Neuzil said it is a question of providing non-mandated services in order to get things done right away or waiting a week or two for services or before things are accomplished. Stutsman said it is not popular to talk about contracting. Budget Coordinator is only really busy during budget time. She asked, is it worth having a full time employee? R. Sullivan said it is important to have those conversations, but it does not mean drastic steps will be taken. He said it is important for the Board to have a backup plan.
Stutsman said one of the biggest criticisms of government is the lack of change. There is no bottom line incentive like in private business to make changes. R. Sullivan said several Iowa counties have incentive because their property tax valuations decrease. Neuzil said the Board can start focusing on the HR side of things and maybe at the next department head meeting start talking about strategic planning. Stutsman said maybe Spenler can do the strategic planning training. Neuzil said strategic planning is just long range planning to set goals for the next five years.
Adjourned at 10:55 a.m.
______________________________________________________________________
Attest: Tom Slockett, Auditor
By:
On the _______ day of _____________________, 2009
By Nancy Tomkovicz, Recording Secretary
Sent to the Board of Supervisors on August 28, 2009.