Iowa Considers Local Disaster Relief Tax Option

A local option sales tax could go on the books as early as April 1 in flood-ravaged regions of Iowa under legislation moving quickly through the Legislature.

Cedar Rapids Democratic Sen. Rob Hogg is a main backer of the effort, which he speculates would have broad support among his constituents, who live in a community still reeling from last summer’s devastating flooding.

“We have to do more locally to get our city whole while we ask for state and federal assistance,” Hogg said.

The measure would require voter approval before a county could enact the tax. All those counties that received a presidential disaster declaration would be eligible — that’s 80 of Iowa’s 99 counties.

The plan will likely get committee approval Thursday, and Hogg said he expected it to clear the Legislature next week and go to the governor.

Pressure for the measure comes largely from Linn County, which includes Cedar Rapids and has the state’s second-largest county population. Large parts of the city and county were swallowed up by the flooded Cedar River and a quick drive through parts of the area make it clear that plenty of work remains.

Rep. Todd Taylor, D-Cedar Rapids, said there’s intense pressure from flood victims to act.

“I think they want us to do something,” said Taylor, who supports the local option tax. “There’s no reason to delay this.”

The time lines contained in the measure underscore the urgency. It calls for a notice of election to be issued Feb. 3, with the election held March 3 and the tax on the books April 1, if voters give their approval.

That’s barely enough time for retailers to adjust their computers to reflect the higher tax, but state Revenue Department officials have assured lawmakers they can handle the change. The state’s sales tax is now 6 percent with the approval last year of a statewide sales tax for local schools. The measure being drafted wouldn’t allow the tax to be higher than 7 percent.

Aides to Gov. Chet Culver said the governor had not taken a position on the measure being drafted but was receptive to disaster relief efforts. The governor has backed a $56 million package of relief efforts, even though it’s $13 million larger than he requested.

Spokesman Phil Roeder said Culver would want assurances that any tax approved by local voters would be devoted to disaster relief efforts.

Asked specifically about local option taxes, Culver has not ruled them out but has been leery.

“We need to listen to those communities that have been affected,” Culver said recently when questioned about the local option issue. “We have to be careful of any type of tax increase on anybody during this recession.”