Jordahl: Let's move on. Local Option Sales Tax. We need to have some language for the budget, for the Local Option Sales Tax, whether we like it or not. The deadline was the 19th of January, Carol? (Inaudible) the Auditor's Office.

Peters: I think that's right.

Jordahl: So we've got it on today to discuss, to make sure we get our feet wet on this, or give Mike an opportunity to discuss it. We have it on again Tuesday the 12th for discussion and we'll need to have some action on Thursday the 14th at our formal meeting in the evening at 5:30 to finalize that language for the ballot.

Peters: Those have been added to the agenda.

Jordahl: Thank you.

Duffy: Well when are we going to discuss it again other than today?

Jordahl: The 12th, an informal meeting on the 12th.

Peters: Do you want to have it on the 7th also?

Jordahl: Why not?

Peters: OK.

Jordahl: Give us an opportunity for an informal on the 7th.

Duffy: But we're not going to hold off there'd be a chance on the 12th for... I've gotten a lot of calls on this thing.

Jordahl: Hey, bring them in. We want to do the right thing on this. Talking with the newspaper folks yesterday about our budget situation, I formulated it as follows, that we have a lot of needs that have gone unmet for a long time, particularly the space needs area, that the Committee has been working on. The jail is crowded and we need to deal with building something to address the jail crowding. We've got Pat off looking into the possibility of space for the Department of Human Services. We're going to need some money. The money's got to come from somewhere so where's the money going to come from? Are we going to raise property taxes, would people like that? No, people wouldn't like that. Are we going to have a bond issue and go into debt for this? People probably wouldn't like that either. Are we going to have a local option sales tax? Well people don't like new taxes. What are we going to do? Well we need more money and the money has to come from somewhere. It's just a question of where we want it to come from. We've made an estimate of $1,800,000, you told me, Sally?

Stutsman: $2,000,000.

Jordahl: $2,000,000?

Stutsman: That would be the City's share, or the County's share, I'm sorry.

Jordahl: The County's share of the.... Annually we would receive $2,000,000 in addition to our budget, which wouldn't build a new jail all by itself, but it'd sure be a step in the right direction.

Stutsman: $2.1 million is what it would be.

Chase: The submits from Coral Ridge are about $2,500,000.

Stutsman: OK with the additional resources from there. The figure I have is based on the 1997 fiscal year projections

Jordahl: I cant help but think Coral Ridge would boost that little, so $2,500,000 ... They were getting into some territory, where I, as a person who was interested in the budget, and I think we all have that as our primary job up here, I would say that I would like to have an additional $2,500,000 infusion into out budget to begin to address these space needs. Now Joe Bolkcom who has now left the Board of Supervisors made a case that sales taxes are regressive which means that people with lower income wind up paying up a larger percentage of their income into this Local Option Sales Tax than do wealthy people. My personal feeling about this is we have a lot of people coming into this community that are using our roads, and law enforcement services, and our ambulance services, and everything else that don't pay taxes here. They come for the football games, they come for the hospital they come for school and we have an opportunity to tax them through the Local Option Sales Tax and if we want to have that $2,500,000 available to augment our budget and to keep from having to raise that money by raising sales to meet our space needs, and other staffing need that have gone unmet through out the budget freeze that has gone on for the past few years. Then we're going to need to support this. If we don't support this, then it is not going to pass. If it doesn't pass than we will have to meet our need through other means. What other mean do have? We have increased increasing property taxes, and the bond issue.

Stutsman: Which is increasing property taxes

Jordahl: Which is ultimately the same thing. So what do you do?

Duffy: You have to keep in mind that the cities like, Iowa City, that they are going to say what they are going to spend if this goes over the one cent sales tax, how they are going to spend it, and the rest of the cities are the same way. So that leaves us with the county, sure we need a jail, probably, we won't say 100% sure. But then again, being as the only thing left from the city is the county, and roads and bridges have to be in there someplace or it not going to pass. This is the role, this is our part, the cities when they annex or build annex and get industrial commercial property the first thing they do is Tiffin. We don't get the taxes from that, and they are looking out for them own selves. I can see why I would probably do the same thing if I was a representative of the City, on their board. But lets not vote assured here that when you are talking about land use planning and different fringe area agreements and things like that, let not... Farmers need this road, and school buses need them someplace that going to have to be in there, and it's a pretty good size chunk too.

Jordahl: I think you make a very good point.

Duffy: I'm saying that if you want it too pass, if not, I guess we're going to.

Jordahl: I think that's right.

Stutsman: Well today I think we need to focus our discussion on what we're going to use the moneys for, not the merit of the sales option tax that is for the voters to decide. We did receive a letter from the Farm Bureau asking for language in our ballot proposal that talked about 75% property tax relief and 25% for roads and bridges. I think we need to...

Duffy: It was the other way around. I don't know.

Stutsman: Carol, do you remember? I was thinking that's what it said.

Duffy: I thought it was 75 (inaudible).

Stutsman: I talked to a representative of the Farm Bureau yesterday and they said it seemed to be the consensus of the Farm Bureau. They weren't so interested in an exact percentage amount. They would be flexible on something like that. But it seemed like the membership is very, very interested in having at least some language in there talking about direct property tax relief. I think the Board needs to decide. Do we want to have that as part of our proposal or do we want to just earmark it all for building needs and roads? Do we want to add something else in there? In what this Farm Bureau representative told me yesterday was that it was defeated in Washington County and the feeling was that Farm Bureau had a lot to say in the defeat of that proposal down there because there wasn't earmarked enough money for property tax relief. I'm just throwing that out to the Board for consideration when we make our decision about what we want to include on the ballot. Getting back to this issue about property tax relief, I visited with Chris downstairs in the Auditor's Office to get some kind of sense of what we are talking about if we use these moneys for direct property tax relief. Now these are just very general figures. We need to rework for some specific scenarios but if we assume that we'd get $2,000,000 from the Local Option Sales Tax on a house that had an evaluation of $100,000, direct property tax relief, if we used all... If we said 100% property tax relief with the sales option proposal, would be $36.07. I think we need to consider that in our discussion too. Is that enough to have that as one of our considerations or are the county residents better served by having that money go for roads and bridges and for jail space or capital needs? Now Chris and I didn't have time... I wanted to get more information on this to see what this translates to the rural community, to the commercial community, if we're talking... I didn't want people to be misled that this was going to be a huge windfall, that they were going to get $700, $800 back with direct property tax relief. I think we need to find out exactly what this does mean to the tax payer. It lends to the argument with the jail. We are going to pay for that jail one way or the other. We're going to get additional dollars through the sales option tax, if it passes, or we're going to have to probably bond, which is going to be... So do you want $36 back or do you want to trust elected officials to make decisions about...

Duffy: Sally, I don't think it was that way at all because the ones that have already passed, most of it for roads and bridges period. That's what it was. Some of them did property tax relief but we just have to infrastructure this county. We need quite a bit of this for roads and bridges.

Stutsman: Right.

Duffy: Now again, I don't mind taking some of our local property tax, not property tax, one cent sales tax, to help out the cities but that's what they're doing. That's what will happen if you take a large percentage, like 75%, of this for building needs. That will go into the General Fund and we have the cities and certain parts of the county, but it's not like in the rural area. Now if you want it to pass, again, we have to come up with something that's going to soothe everybody.

Stutsman: Yes. I agree, Charlie, that has to be something there. Carol, did you have something that you were going...

Peters: I was just going to share some comments that had been directed at myself when people talk about the Local Option Sales Tax and also to kind of, not verbatim, but mention what Opal Current had said. The people that I have visited with, or they have visited about the Local Option Sales Tax with me, they are very concerned about paying that extra percentage on medication, foods, and the necessities, such as that. I think you need to really inform the public what this would be attached to. You don't pay taxes on food. You don't pay taxes on medication.

Stutsman: You don't pay on fuel. Is that correct?

Peters: Right.

Duffy: Automobiles.

Peters: Yes, automobiles, farm machinery.

Stutsman: Uh-huh.

Peters: I think there's a lot of misunderstanding...

Stutsman: I agree, Carol.

Peters: ...misconceptions, out there.

Stutsman: That's...

Peters: I think really when you inform the public, via newspaper, or press releases, or whatever, if you just get that message out to people...

Stutsman: Well and that's...

Peters: ...because they are very concerned.

Stutsman: Oh yes.

Peters: They are so concerned, especially people on limited income. They are really worried.

Stutsman: Oh sure. That's what I was trying to do by getting this information from the Auditor's Office too so we have the facts about what this means. How much this is going to mean on your tax bill, if there is going to be a direct reduction in property tax. I remember when the State was having a discussion about income tax or property tax relief on the State level. They did figures and it was basically going to amount to a Happy Meal. Well, good grief. Keep it. I can do without that. For the cost of cutting a check or giving me that tax relief, I trust the elected officials to make decisions about where to use that money. But I think we have to be sensitive to how people view this and educate and make a good cause for why we feel this is the best use of those dollars because it is important to...

Jordahl: You're quiet down there, Mike.

Lehman: I'm soaking this in but I think, like you both mentioned, for the county residents to pass this, it has to be something that they're going to see or use. Whether it is in the form of a tax relief, or bridges or roads, where they can actually see something, it also has to be something we presently need or for the future that we're going to need so they understand that it's not a wish list, something out in blue sky that we want to just improve and won't benefit as many people as we'd like to see benefited. Like Carol said, we need to, when this is the education part of it, let people know what it does cover, what it does not cover because there are a lot of false ideas out there to the negative. People think they're going to be paying taxes on it when they may not be.

Jordahl: Uh-huh.

Stutsman: So Charlie, what I heard you saying was the concern about rural residents. When we talk about the jail, they feel that they are carrying, if all of our money from the sales option tax went to a jail, or a good portion of it, that rural tax payers are being asked to spend most of their money on the jail. They want to see things that benefit them directly...

Duffy: Well just...

Stutsman: ...for instance, the roads and bridges.

Duffy: Yes, well I say that because we're talking about rural now, with the cities out of there. But if people think it's just another tax, forget it. I've had people say it's just another tax but if it's, like Jonathan started out, if it's for the right things, I think we've got a chance. But if it's just another tax, it's not going to fly.

Jordahl: Another question is, who pays this tax? Property tax is paid only by people who live here. But this sales tax, this is... As somebody put it to me, I think it was you, Mike, they built that mall out on the interstate for a reason. I give you the example of Williamsburg. They didn't put that outlet mall there because they thought all the people in Williamsburg were going to make them rich. It was the interstate. We've got a lot of people just stopping in. You go through that Coral Ridge Mall parking lot, those aren't all Iowa license plates. They certainly aren't all Johnson County license plates.

Duffy: I know.

Jordahl: There's a lot of money changing hands there that is from outside this area. This is an opportunity for us to... And those people use local services. It makes sense for us to take advantage of that fact and get some of our local needs met through people who are not county residents, who we don't have any other opportunity to get resources from. I want to address this property tax relief question because if we have genuine space needs, and I think it's indisputable that we need a new jail... Our jail, according to recent reports, at capacity currently.

Stutsman: Over.

Jordahl: Or over, yes. That is according to standards which went out of existence during the construction of our jail. We were grandfathered in. If it were not for the fact that we were grandfathered in under old rules, we would be double over capacity right now. I think it's very clear that we need a new jail. What does a new jail cost? Quite a bit. I've heard, at the level of hearsay, in Scott County they are talking about a new jail in the neighborhood of $26,000,000.

Duffy: It's more than that. It's about $46,000,000.

Stutsman: Yes, I think they are proposal was 40 something.

Jordahl: OK, throw it out at $40,000,000. $2,000,000 isn't going to buy us a new jail. Something is going to have to be done here. Now, you can take this whole $2,500,000 and put it into property tax relief, make everybody happy. Oh boy, we've got property tax relief. But guess what, surprise, surprise. We're going to have to get that money from somewhere. Instead of taking it from people who are outside the county, in significant part, we're going to take it all from property taxes, from people inside the county.

Duffy: I agree with what you're saying. Where do you get that $2,000,000? You mean $2,000,000 a year?

Jordahl: That's what we're (inaudible).

Stutsman: That's what they are estimating.

Duffy: Knock off the $2,000,000. It's about $2,500,000 a year.

Jordahl: Yes.

Duffy: The jail is in good shape itself. It's just too small.

Stutsman: Uh-huh.

Jordahl: Yes.

Duffy: The builders of that jail knew what they were doing.

Stutsman: Right.

Duffy: Here's a chance to cooperate with the University of Iowa. If they cooperate with us. We can add on to it. Now keep in mind, the people in that jail, where did most of them come from? Not in the rural areas. Some of them might have been but...

Jordahl: Well I don't know that that's particularly significant, in that everybody's going to have to pay for it.

Duffy: Well, still, I'm not saying that we should but again, if you want to get this thing passed...

Stutsman: Yes, and I think Charlie makes a very good point. If you want to get it passed in the rural areas, you have to listen to what rural voters are saying. I just wanted to mention that the jail, we're required by State law for the County to maintain the jail, so whether the residents come from the county or the city, that's irrelevant. That's our responsibility, is to maintain the jail.

Duffy: Yes, but it's inside the city and the City used to have a jail of their own.

Jordahl: They'd be welcome to build another one if they wanted to.

Peters: That is funded out of their general fund.

Duffy: General Fund, yes.

Chase: I'm not saying anything that you guys aren't already saying but my analysis of local option ballots around the state have shown that roads are very successful.

Jordahl: Uh-huh.

Chase: Over 95% of all the ballot issues that have passed in the state had a significant portion going to roads. Issues that, you guys have already said this, in terms of rural voting, has to be something they can see. Property tax has less of an impact. Property tax relief has less of an impact on the outcome and issues where the voters perceive that the ballot is trying to go around what would normally be a bond issue, can (inaudible) about schools and jails, tend to not do well.

Stutsman: Where they tend to go around a bond... OK.

Chase: Because what happens is, the voters perceive the attempt on a local option, which is a simple majority vote, as an effort to avoid the super majority required at a bond. At least a segment of the population indicates that they oppose the local option because they view it as a way for the Board of Supervisors to try circumvent the super majority requirement.

Stutsman: In the feedback I hear, I think the people want to have control of their tax dollars and they feel they lose control when they just vote for a sales option tax for infrastructure. Well then maybe I don't want a jail. A bond issue lets them have more control over whether they want it. They feel like if they're just saying infrastructure for a sales option tax, then we can build a jail and tomorrow we can build a... Every project has its supporters. I was going to say an ice skating rink or something like that. Some people think that's not important for my tax dollars to go for.

Chase: That's certainly indicated in that success of ballot issues. The more specific the language is for projects, the better they tend to do. Infrastructure tends to have less support than defining the particular projects because people don't mind taxes when they know where the money is going.

Stutsman: Yes.

Chase: A number of studies detail this. Obviously, you're aware of that. That's one of the reasons that the local option is successful in Iowa. Over 1,000 communities have them in place. Only 3 major cities in Iowa don't, Des Moines, Iowa City, and Cedar Rapids area.

Peters: Wasn't another thing added to that to keep it to a minimum?

Chase: That's a recommendation. Yes.

Stutsman: Keep it to a minimum?

Chase: There are 2 different theories of creating your ballot proposals. One is the shotgun approach where you try to get as many people, put as many projects out there, you get approval from as many people as possible. Again, this is my analysis on how it has gone in other areas in the state. That tends to not work. A few very popular projects, or a few notable projects, roads or big civic improvement, those tend to do very well.

Jordahl: Big civic improvement to include jail or not?

Chase: IMAX Theater...

Jordahl: IMAX would be good. A rural IMAX.

Stutsman: A rural IMAX Theater...

Chase: No, actually, really jails tend to not do well.

Jordahl: Uh-huh.

Chase: Jails and schools tend to not do well. I think we saw that in Washington County because they were (inaudible) to jails.

Jordahl: Uh-huh.

Duffy: To add on to something you said, Jonathan, we're paying it when we go any place out of this county, almost. We're paying the one cent sales tax.

Stutsman: Oh, right.

Duffy: You get into other states and it's even worse than that. I'm going to agree with you.

Stutsman: Story County has had it for years and has really done some real positive things with those additional dollars. The other thing I wanted to caution... we talk about $2,500,000. This is a good economy. I don't want to get into a position where we're depending on those dollars. If the economy starts to not do as well...

Chase: That's true. It's an elastic revenue stream. That means your budgeting has to be a lot more conservative on revenues.

Jordahl: What a fine phrase, elastic revenue stream.

Stutsman: Sounds like my waistline.

Chase: It's that economic class I took.

Duffy: (Inaudible) will stretch like that. That's good.

Stutsman: I have never had a problem with part of our ballot allocation going to roads and bridges and things. I think we just need to decide if we want to address the property tax issue and if we want to put some amount there, if we want to talk about capital needs...

Jordahl: We can make the ballot language say but nothing roads and property tax relief, make the Farm Bureau happy. But we'd still have to turn around and pay for a jail.

Stutsman: Yes.

Jordahl: If we don't put it on the ballot, it's just a question of which pot are we going to put the money in. At any given time, we've still got to meet the same needs. So if the most effective way of dealing with the ballot issue is to put it under roads and property taxes, we can do that. But that doesn't mean property taxes are going to go down, that just means (inaudible).

Duffy: Well no. I wouldn't... Again, it all boils down to the fact that people don't think this is just another tax, any way you cut it. If they think that, forget it. It's gone.

Stutsman: There again, I think it goes back to the voter wanting control of where these tax dollars go. If we don't put the jail on and we put that on a bond, then the voter votes whether they want to do that. This just makes it, by putting it in the sales option tax... I'm just trying to explain where people are thinking. By including this, then once we build the jail, then what do we do with those dollars? Does the tax payer have control over what we're going to do. But then they elect us too and they elect us to makes decisions. If they don't like the decisions we make, they certainly can...

Jordahl: Somebody else...

Stutsman: Yes.

Jordahl: This is a different Board. We've had this discussion, Mike, before you were on the Board and the Board was very strong in its opinion, minus me. Everybody else was strong in the idea that we need... space needs were a top priority. We didn't want to do roads and that's been shifting. Now it sounds like it's shifting all over the place. I'm happy with that. That's fine.

Stutsman: We just have to discuss...

Jordahl: But you're still real quiet on the issue.

Lehman: I think like Cole was saying, you can't have too many, just to bring in more people to the positive.

Jordahl: Uh-huh.

Lehman: You have to be specific and I think roads, bridges, or anything along that line, things that the average rural county resident, who's going have to vote on our part of it, can see and feel the use. Jail is a need but they don't want to think they're ever going to need it, even though it's for the benefit of society or whatever.

Jordahl: Yes.

Lehman: I think you're going to have to limit it because, I think what you bring up on the tax... Everybody has to figure out what their own tax relief might be, but when you bring up those figures, it is pretty minor for the average person. I think they'll realize that we can give it back to you now or take back away from you because we're going to have it later on.

Stutsman: We need to do some more calculations to see what this spells out for farm people.

Lehman: (Inaudible) whole scale of people. This is the land value, house, whatever...

Stutsman: Yes.

Lehman: But that's a start and it gives the average person an idea of what...

Jordahl: It's not like we don't need it for the roads. Roads, we've been in here talking about roads...

Lehman: There may be some other things but those are 2 real visible things, roads and bridges. There's other things out there. You have to be specific.

Jordahl: We have about 2 weeks to do it.

Stutsman: I think 2, if we do decide to put some of these dollars into space needs then we are the ones that have to inform the public of what this means. We are going to pay for a jail, or to house prisoners one way or the other. We're either going to build a bigger jail to house them locally or we're going to spend money to house them out of county. It's going to cost one way or the other. It's much more cost efficient if we can keep them here, not only the per diem cost, but also the time it's going to cost to transport prisoners back and forth.

Jordahl: And additional staff. Sheriff's Department...

Stutsman: Right. Those are all the issues that we've to carefully lay out so that people fully understand what we're talking about.

Chase: Another thing that makes it easier to sell, if you're going after jails, it surprises me that other communities have missed this when they put it on the ballot, is that like you said, the State requires you to have a jail so you have to have a jail. Well the formula recognizes that the County has demands put on it by the State. The jail is one of those. The formula, the County receives more revenues than they generate as an individual distinct entity with taxes because the formula recognizes that. You're providing the services and it recognizes that so you need the money. It's not, I don't want to say this in front of Dave Trammel, it's not necessarily unreasonable for a County to use local option funds for a jail, but you combat the voters.

Stutsman: Right and there again we just have to educate, make a very consorted effort to educate the voters why this isn't just benefiting the city, that we're not using revenues generated by county residents just to benefit the city.

Duffy: Well I think that's probably what we're doing. I think we'd have a better chance, and I thought you said this, Cole, if we do indeed need a new jail, I'm not so sure yet that we do, if we can remodel or add on to the jail we have now, but still I think your chances on a bond issue would be better that way than tying it in with the sales tax. I really do. I looked up some of these counties that were successful and almost all of them... like Mike said, roads and bridges are great, but whether we should tie the 2 together... That's important to us. If this doesn't go over... But I don't know whether it is wise now to tie the 2 together.

Chase: What happens if local option does not pass, you still have the jail needs and you can't pass the bond? You're required by State law to provide...

Stutsman: Then we will pay to transport prisoners outside the county.

Chase: That comes out of the General Fund.

Stutsman: Right.

Chase: So other programs are (inaudible).

Stutsman: Pardon me?

Chase: So other programs are (inaudible)...

Stutsman: Yes.

Chase: ...because you're required to (inaudible)...

Stutsman: Yes.

Jordahl: And or...

Stutsman: We'll have to pay for it.

Jordahl: And or we will tax to pay for it.

Stutsman: That's what I think has to be made very clear to the voter. These are fixed costs. We are going to have to pay for them one way or the other. This is an opportunity to get an additional resource, and like Jonathan said, even for people from outside the county to help pay for something that we are required by law to provide.

Duffy: That's true.

Stutsman: This is not a skating rink. This is something that we are required to do. Charlie, you talk about building a new jail. Even remodeling the current jail is going to cost...

Duffy: I know...

Stutsman: ...at least $10,000,000.

Chase: I believe there's discussion with the University and there's never any willingness on their part to part with any land.

Duffy: Well I know that. I just threw that in.

Stutsman: We're just being optimistic that...

Duffy: But still we wouldn't need much because the jail is built well. It's not a real old jail.

Stutsman: Uh-huh.

Chase: Charlie, jails are expensive to build.

Stutsman: Oh.

Duffy: I know they are.

Chase: I've seen some of the shy details of other jails and boy, basically...

Duffy: Some people talk about regional jails and some people say we're putting too many people in jails.

Jordahl: I agree with that but we don't have much control over that.

Duffy: Really, I've have calls that way saying...

Stutsman: It's interesting. We all wanted to be tough on crime. Well, these are the consequences of being very tough on crime. In one sense, it's very good. But we just didn't think...

Lehman: Pat White said that Crime Prevention Bill gave more officers out there, a couple more people, and he's on the end where prosecution and incarceration got left short. But people are breaking the law, are you going to look the other way on them?

Stutsman: Yes.

Lehman: Mike, I have a question. If we do designate like roads and bridges, is that going to supplement our Secondary Roads Budget to a point? Can we use that money for something else that's already there or is this going to be additional to their budget?

Duffy: Well really...

Lehman: I realize their budget is not going to build a jail for us, what they have now but is that something else...

Jordahl: There is a real interesting question there. I think there's some kind of statutory limitation on the amount of money we can transfer to Secondary Roads. I don't think that's just from the General Fund. We need to explore the question of how much we can (inaudible).

Lehman: Is there a way that you can shift it around, not that you're only going to build 10 bridges this year, that's all you can continue to build. We don't want to hide it but can we do a little shifting there and still do additional bridges and road repairs and stuff?

Duffy: Now there's a case where you should ask the Auditor, maybe.

Stutsman: I think we do need to...

Duffy: I think it's a percentage of tax.

Lehman: OK.

Duffy: What do you think, Carol?

Peters: There's 2 different requirements there. In order to be eligible for Farm to Market moneys you have to levy a certain percentage of the amount allowable.

Duffy: Uh-huh.

Peters: Then the other thing too is in the general basic you can levy up to a certain percent that can be transferred into the rural. That's taking into consideration that everybody uses these roads. That amount has varied depending on where you were with the rural.

Duffy: In other words, the limitation is on the percentage of tax that we tax people?

Peters: Yes.

Duffy: See this is just a little bit different.

Jordahl: It's just a minimum.

Duffy: Yes.

Peters: One of the things that could be accomplished, and I didn't follow your budget last year, but the moneys that could have been transferred from general to rural, perhaps you wouldn't have to do that. But you always have to watch the percentage amount that you must tax in order to make you eligible for state and federal funding.

Duffy: Yes. I thought the County budget that we're operating under now came in about $500,000 less than it. If I remember something like that then we take $500,000 off the budget.

Stutsman: I'm just going to throw out some figures. What does the Board feel about 40% for space needs and work on that a little bit, 25% for property tax relief and 35% for roads and bridges?

Lehman: Well in space, are you going to name...

Stutsman: Well that's the thing. I think we need...

Lehman: You could be specific.

Stutsman:...information on how to word that because I think you don't want to be too specific to tie you down, like if the jail is built and this continues, then what do you do?

Lehman: Yes.

Stutsman: I think we need... Cole, yes?

Chase: The best phrase is such as.

Stutsman: Such as...

Chase: Such as, so projects such as a jail, additional administrative spaces, health and human services. You include those in there. You're not limited to those. You can use that for many legal infrastructure space needs expenditures and still cover those projects and define some specific projects. Then in a policy statement, you can identify priorities that say the fist thing that you want to do is address Human Service needs, or get some heat in this room. It will be warm by then though.

Jordahl: I have to ask...

Duffy: What was that again, Sally?

Stutsman: Pardon me?

Duffy: What was that again?

Stutsman: Just for the sake of discussion, I said 40% for such as space needs, 35% for roads and bridges, and 25% for property tax relief.

Jordahl: Now, getting to that property tax relief question, Cole, you seem to have a intimate familiarity with the mathematics of these things, is it not true to suggest that tax relief is a pure and simple shell game, that if we say we'll take 25% of this money that comes in here and take it right off of property taxes. But we've still got to meet those needs for the jail so we turn right around and tax for it because we need to have those needs met?

Chase: Ultimately, yes, that is how is could be perceived. But actually, there is some relief. The relief is it is not a tax reduction, it is relief. It's avoiding future increases because if you have these needs that you have to provide, you're going to have to either raise taxes or pay for them in another way. This tax is the other way. It can be perceived as a shell game. Hypothetically, if you were to say all of it is going to property tax relief, so all roughly $2,500,000 goes to property tax relief, but next year you need to build a jail. The bond doesn't pass so now you're shipping them out. It costs us $1,000,000 a year. You've got to raise that money some place or cut programs. Decide you want to raise the money so you raise property taxes, that relief isn't there. It would have been if the tax had been passed.

Lehman: I think the bottom line is you need to have specific things that we do need and this is the chance to get outside...

Chase: Help paying for it.

Lehman: Yes.

Stutsman: I understand the shell game with property tax but I also understand the psychology of the voter too. I think it's very successful to say there's property tax relief because many voters don't understand all of the idiosyncrasies with funding and all that. I think if you're going to have a broad based appeal that people can relate to, can understand, and say there' something in it for me, this is probably the way to go.

Chase: Property tax relief is the next most successful ballot thing.

Jordahl: Would that property tax relief go to city dwellers as well? We're talking about rural people voting for the county's...

Stutsman: That's a good question.

Lehman: That's the question I had. We're going to have our ballot for rural residents. Iowa City's going to have theirs. Coralville is going to have theirs and such... What combination has to pass? Does it have to be everybody unanimous? Apparently, or we're not going to get anything from Coralville, if they don't pass.

Chase: Each jurisdiction votes, however, contiguous units vote as a block.

Duffy: That's right.

Chase: So Coralville, Hills, Iowa City, North Liberty, and...

Stutsman: U Heights...

Jordahl: U Heights. But not Tiffin, I understand..

Chase: Tiffin is in there now. Tiffin is.

Jordahl: Now I understand according to the map, they're not contiguous.

Chase: I believe there's been a recent adaptation and they're contiguous.

Jordahl: Has that been approved now up there by Forevergreen Road?

Chase: I believe that's correct.

Stutsman: Yes. I'll give you a copy of this, Mike. This came from the City and it's just a real good synopsis of understanding the Local Option Sales Tax and they do include Tiffin.

Lehman: OK.

Stutsman: If everybody else in the county can vote it down but if the county residents vote, then we still have it, for the unincorporated areas, the rural...

Chase: It's only collective in the unincorporated. It's only collective in areas where it passes. So hypothetically, it could fail every place except for Solon and then Solon would still have the local option and collect...

Stutsman: But they wouldn't get any of the tax that was generated from the Coral Ridge Mall.

Chase: Right. None would be collected.

Jordahl: There wouldn't be any.

Lehman: Right. Would Solon have to share...

Chase: There's a little wrinkle in there that Opal touched on which is the fact that it's the usage tax. When small communities pass a Local Option at the exclusion of the rest of the county, they benefit because all the usage tax collected in that county is remitted only to those under a local option. That's why that little community in Linn County...

Stutsman: Bertram...

Chase: ...is getting $54,000 a year.

Stutsman: And they don't even have a business in Bertram.

Jordahl: I remember this point. But I don't know what a usage tax is.

Chase: Use tax is... And this is where the confusion lies between the sales tax and the usage tax. I'll be brief on this. Whenever you buy an item via the internet, actually internet is mail-order. Mail order is the best example.

Peters: Or if you purchase something from outside, like in Nebraska, someplace that have it shipped. It's not through mail-order, you actually go to that place.

Chase: You go to Omaha and you buy that and they ship it to you.

Peters: They ship it to you.

Chase: They don't charge you sales tax because it's being delivered via common carrier to another location. You're required to pay that tax they're required to collect that tax in some fashion and remit it back to the state. Estimates show that only about 40 % of the usage tax is collected right now. But as more and more businesses become computerized the more information is shared between states and counties and cities, that's increasing. That's a usage tax. It's that tax that's not a sales tax that's still required by law to be collected. I'll provide you some information (inaudible) right now. I'll provide a 5th packet so you can prepare the new Supervisor as well. It just details the basics on the differences on the sales tax and the usage tax and collection information and revenues.

Lehman: I have a question. What's the length of term of this tax has to be renewed, re-voted on. Say we use it for 100 % roads and bridges. After 5 years we've got that pretty well we feel (inaudible). Can we change the direction what we use it for. Will it have to come up for vote again?

Chase: If the original (inaudible) option (inaudible) the fund, the revenue to Roads and you wanted to change it to something else, space needs or salary or something, it would have to come under vote.

Stutsman: Even to change the proposal, huh.

Chase: If it changes it like that. But if you say space needs such as under administration building, a new jail, you can just keep going down the line and space needs will pop up again in the future as they occur. Because the ballot language is general enough you can use it for new space needs.

Lehman: So we need to have something in there, we got a loophole or something we do feel one area's been taken care of.

Chase: If the structure's another one of those general languages that allows you continue to move from project to project. Because the infrastructure can be roads, it can be computer network, it can be buildings.

Duffy: Every year, did you say, or every 3 years or just the agreement that's on the ballot?

Chase: Local option lasts forever if you don't put a sunset clause on it. But you (inaudible) ballot language sunset language.

Stutsman: The city council didn't put a sunset.

Chase: There's not a sunset.

Stutsman: I know that there's pros and cons to putting sunset language in the proposal too.

Lehman: Have you heard of any of the communities limit it in sunset clause?

Chase: A number of communities have. Cedar Rapids proposed it in their most recent ballot a 5 year sunset. The first time Waterloo passed it they had a 3 year sunset. And the people loved it so much they passed it again without a sunset, dedicating all the funds for Roads.

Jordahl: As I recall (inaudible) presentation I think you said that no community that let this thing go into effect had ever let it go out of effect.

Chase: That's correct. Even if they have a sunset clause the communities have always voted it back.

Lehman: I think that'd be a big selling point that counties that have had it realize how important to their well being. The one's that haven't had it don't know don't know what they missed out on.

Duffy: You're right. Sunset clause I think's very important. It should be 3-5 years.

Chase: My intention is to have the chair of our task force make a presentation on the chamber goals for local option at a meeting on the 7th. That'll detail...

Stutsman: Our Board meeting?

Chase: Yes. Just as part of public comment. It'd be real brief. 5 minutes or so. Detail just the priorities the chamber would like to see addressed, similar to the Farm Bureau.

Duffy: Do you want to address that on the 12th? Because we're going to go on the 12th too.

Chase: Are you also going to be here (inaudible) on the 7th?

Stutsman: Yes.

Chase: What would work better... Is that a day meeting? The 12th is...

Jordahl: 12th is the morning.

Stutsman: But the 7th will be on camera.

Peters: The 7th will be videotaped.

Chase: Let me check with my chair and see what he prefers. And I'm meeting with him as soon as we're done here today. I'll get a hold of Carol (inaudible).

Stutsman: How does the Board feel about those percentages? Do you want to think about those?

Duffy: I want to think about them for a while. Other things that are coming up here...

Lehman: We need to target.

Stutsman: We do. We need to get this nailed down by next Tuesday.

Jordahl: I guess I want to grab a hold of this slippery little thing here of tax relief and ask what we want to do with that in terms here's the space needs stuff sitting here and here's tax relief and we've got this proposal from Sally to say instead of all of it for space needs which we had been saying a few months ago. To then the last time it was 20 % roads and 80 % space needs and now this time we're down to 40 % space needs and 25 % tax relief. I'm wondering if following my graph again where this is going. If we're really headed toward tax relief and roads. Do we want space needs to be a part of this at all. I pose that as a question not as a proposal. But if the logic of passing the thing is that in order to pass it it needs to have local support which can be gotten if it goes directly to tax relief then we simply address the space needs questions through other funding routes...

Stutsman: Bonding.

Jordahl: ...through bonding or raising taxes. And send this money directly to tax relief. It's like what's the difference, it's 6 of one half a dozen of the other?

Duffy: I don't know if I agree with that Jonathan. Maybe we better look at the budgets when they come in and see if we can't cut some of these things we've been funding too. Certain line items as far as I'm concerned are going to get the knife. We're going to have 2 more informal meetings. I thought we did a good job discussing it by the way.

Jordahl: This would take huge pressure off of our budget.

Duffy: Absolutely, absolutely right. But we got to be careful that it's done right because this is a big thing.

Lehman: We have to be specific in what we want. But I got a feeling most of the success of this is going to depend on marketing. If you're going to have to show a little relief even though people are going to sit there or come in or talk to anybody about what it actually means to them as an individual just the idea the words tax relief on there is going to sell people. It's part of the marketing advertising.

Jordahl: It's not false either. On the one hand it's a shell game on the other hand it's absolutely true. That this money will go directly off of their tax bill. However their tax bill still is going to reflect the realities of the needs of the County.

Chase: You could dedicate 100% of the revenues from this tax to tax relief and if there's an emergency you could see a tax increase the very next year. That's one of the politically dangerous parts about it. Assuming you guys want to stay in those seats you want to avoid that at all costs you know saying that you've just passed this local option we now have near 2 and a half million in new monies. But we're also raising your taxes. The other aspect is that what I recognize because I've had the ability to go look into this if we have that 2 and a half million dollars in place and then you raise my taxes you're raising my taxes less than you would have before hand.

Jordahl: Say that again.

Chase: OK. Say a hypothetical situation where 100 % of revenues goes to tax relief. Something occurs where you have to raise taxes just to meet your budget. Just to meet your budget provide the same local services. Had that tax not passed, you wouldn't have had that additional 2 and a half million dollars in your general fund and you would have had to raise my taxes that much more just to meet that same local demand. That's where property tax relief comes from.

Lehman: In essence this tax may be a tax relief not a direct. It's an indirect.

Chase: If it passes it will be. At the very least it will indirect property tax relief.

Stutsman: But there's something about the psychology of the voter that can look at its tax bail and says there's my 13 dollars. And that's been you know what sells on the state level, when you get people that say we're going to give you property tax. People don't always think it through what this really means. But it's a selling point.

Lolly Eggers: I want to remind you that on the ballot the top line has to say how much goes for property tax. If you don't do any it says zero % for property tax. And that psychologically has... If you have a policy on how you're going to spend it on capital needs that's fine but it isn't going to show on the ballot. The city council on all there... But that's going to be hard to get that across because it's not...

Jordahl: Because people are going to walk in that have never paid a whole bunch of attention to it and see it.

Eggers: And the ballot in Iowa City about water relief that's a good example. The water rates are just not going to go up. But the relief is in that you aren't going to have raised water rates, it isn't going to reduce water rates.

Chase: That particular item makes it much easier to sell the local option assuming that's what you want to do. I want to emphasize that the chamber doesn't have a position on the local option right now. We neither support nor oppose the local option as proposed.

Jordahl: The statement was made here earlier that the voters will decide this and I think that's absolutely true. But as Mike put it, marketing is an important piece of this. Part of the marketing is what's the ballot going to say. That's really the item on the agenda today, is what's the ballot language going to be. And the issue of marketing is going to be in part how we as members of the Board speak of this to other people. I don't know how appropriate it is to the Board to go out and try and sell this. But we can certainly by saying we have these needs, this is additional income, if we don't get the additional from here we're going to have get it from people in the County. You can call that marketing or you can call that logic or you can it straight facts.

Stutsman: I think it's just educating the voters about what this means.

Chase: An ad hoc committee has been formed on this issue by proponents of local option. I can get you information on them as well if you want to coordinate with them educational campaign the chamber will be coordinating with them as well.

Jordahl: Because without that educational campaign without it being apparent that members of the Board of Supervisors understand the benefits of this tax to the County, it won't pass. And we won't have these funds to worry about.

Duffy: Lolly you brought up a very important thing because that's the first thing you see. Zero percent property tax. That's kind of a negative thing right there. That has to be on the ballot?

Eggers: Has to be the first thing on the ballot.

Peters: The city (inaudible) then you go on to a capital (inaudible).

Jordahl: OK. Food for thought for next time, is how much do we want to say goes for property tax relief. Because as I say it's a shell game but it's not a shell game. That it's really money that's really coming in the County coffers. If we really give it property tax relief it's really there. And we meet whatever needs we can or cut wherever we can Charlie and end up with what we think the legitimate needs of the County are and we tax for what's left using this as a resource to help avoid any tax increases. I would be in favor of changing our position on this dramatically and talking about a huge amount for property tax relief and just meet the needs of the County as we can. For next time...

Duffy: Well, there's things we have to look up Jonathan. Like I say we have good discussion but there's some things that haven't been brought out here.

Jordahl: Let's bring them out next time. We haven't got very long.

Reverend Bob Welsh: Your discussion today raises a question for me. If I live in the County, and I don't, and the County portion passes the sales tax, the consolidated communities Iowa City etc, do not pass it as a rural resident for the rural businesses in the unincorporated area, do they collect the sales tax?

Jordahl: Yes.

Lehman: Who shares in that?

Welsh: Just the County.

Jordahl: Those entities that pass the local option sales tax.

Welsh: That would mean if I was a small business person just outside of an incorporated area, a rural area, I might have to be collecting it and right across the street which is in an incorporated area they can be collecting it.

Jordahl: Right. In that circumstance I think the Board would be quite likely to take immediate action to rescind the tax which we could do I think by Board action the next day.

Duffy: But it could be the other way around Bob, too.

Welsh: I notice that.

Duffy: I think Jonathan's done a good job explaining here this morning.

Jordahl: Well, we've had a lot of help. Thanks Cole.

Duffy: Cole always gives us some good ideas.

Jordahl: I really appreciate your help on that.

Stutsman: We're going to continue discussing this then on Thursday.

Jordahl: Thursday and Tuesday until we get it right.

Stutsman: Can we take a short break?

Welsh: One other comment. Once you decide on the percentages and I'm sure you'll do this is I would then give it to your County Attorney to come up with the language rather than you all trying to do it. The other point that I make is you need to check on that rural leverage what you can and cannot do at that point. Make sure that you've involved the Auditor's office on it.

Jordahl: The unanswered question that I still had too, who gets property tax relief? If the rural voters vote it in and if we get the County portion reflects that which really appropriately is the rural portion can that tax relief only go to those rural voters then? Is that what we're really talking about? That would go way beyond your $36 then if it was just going to rural property (inaudible).

Stutsman: Because this is assuming all tax payers in Johnson County not just rural.

Jordahl: Right. I assume that in may in fact be a whopping amount would be property tax relief for those rural taxpayers.

Chase: I don't think you have a way to do that.

Stutsman: I bet not either.

Chase: My gut feeling on this is the formal (inaudible). But it doesn't seem as though you could tax rural residents and city residents at a different rate which is what you'd have to do to separate those. You'd have to apply property tax relief to strictly rural residents. I (inaudible) they would.

Jordahl: And yet it is there vote in strictly the rural area and the distribution formula is to the County...

Stutsman: But then if the City puts property tax relief they don't collect taxes from rural residents.

Jordahl: They do if we spend it in there.

Duffy: That's right.

Jordahl: Spend money at the mall.

Peters: (Inaudible) you tax for the general and for the rural. You have a rural basic and a general basic. That's for your expenditures. The people in the city...

Stutsman: Contribute to the general.

Peters: ...contribute to the general. Depending on what the Board decides to do. Only a small portion of mine would go to the rural and that would be if you transferred it.

Jordahl: We could give the tax relief in the rural basic fund, right? We could put the whole 2 million dollars in to that and tax for very precious little at all.

Peters: The people in the unincorporated area they are taxed additionally for library services. Because then you pay for library services out of what you levy in the rural. And when you look at your tax bill, or look at your budget, the Auditor shows you what percentage of the tax dollar is spent in rural, cities, schools, whatever; then you take that same bill and look at it being distributed for property in the unincorporated area those percentages are different.

Welsh: As a citizen in my own city I would not vote for the County.

Jordahl: Right.

Welsh: And so your thing about property tax relief would not affect me.

Jordahl: Seems like it shouldn't.

Peters: It seems like you need to get a legal answer.

Stutsman: Yes. If it was space though I think that would be, this is complicated so we need to get this clarified, because the road comes just out of that rural fund. But the space needs would come out of general fund.

Peters: Actually in your general basic there is that provision that you can tax a certain amount to be transferred to rural basic.

Jordahl: Right, and we do that.

Peters: On the theory that everybody uses roads. It's not a large amount.

Stutsman: We need to get that clarified because that is an interesting point.

Jordahl: And it would be a major impact on that rural basic fund taxation. People would see that drop like a rock.

Chase: How big is the rural basic fund right now?

Jordahl: Secondary Roads is 2.5 million, something like that we tax for, I think.

Stutsman: I think it's more than that.

Duffy: Secondary Roads is about 3 million.

Peters: And better than half of that comes from state and federal.

Duffy: Well 6 million..

Jordahl: It's like 6 or 7 total.

Duffy: ...6 million and about half of that does come from state, Feds.

Chase: That would make a big difference.

Jordahl: If 2 and a half million dollars people would notice that. They'd be in here clapping us on the back. Giving parades around the County.

Chase: If it did pass in the cities (inaudible) in the County it wouldn't be 2 and a half million bucks.

Jordahl: No, but neither would it survive. People would be pretty eager to see us get rid of that. Sally asked for a break and I second that emotion. Let's do it. Temporary recess for break.

Recessed at 11:10 a.m.; reconvened at 11:17 a.m.

(Continued in Part 4)