The Ottumwa Courier

Local News

February 25, 2013

Renewing LOST a ‘no-brainer’

Revenues from Local Option Sales Tax is one-fourth of Eldon’s budget

ELDON — If Eldon voters do not renew their 1 percent sales tax, they’re going to be in a “world of hurt,” said Blakesburg’s mayor.

At a forum Sunday afternoon in Eldon, area officials gathered to discuss the importance of the Local Option Sales Tax for the small town.

Blakesburg Mayor Jason Myers said LOST has “done wonders for us.”

“Most of our streets used to be gravel, but with the tax we’ve been able to re-do all of our streets, so now we have pretty nice streets in town,” Myers said. “If we lost that tax, it would be devastating for Blakesburg. All I can say is, if you lose it, you’re going to be in a world of hurt.”

Eldon City Councilman Jerry Potts said the approximately $93,000 Eldon receives every year from the 1 percent sales tax makes up 26 percent of the city’s budget. In the November general election, voters voted down the renewal of the sales tax by two votes.

Wapello County Supervisor Steve Siegel said Eldon will face “catastrophic” budget problems if the sales tax does not pass.

“Frankly, there’s no reason for the voters of Eldon to vote ‘No,’” Siegel said. “The reality is most of them do 95 percent of their shopping in communities that do have LOST, so they’re paying the 1 percent. But if they vote it down, they won’t receive the benefits back from it.”

Last year, when Wapello County municipalities put the sales tax up for a vote during the general election, Siegel said the supervisors told those in the rural areas of the county that “you’re not saving yourself any tax money, but you are going to cost the city a lot of money.”

Revenues generated countywide from the sales tax would be distributed among those municipalities that approved the tax renewal — except for Eldon.

“One of the biggest things the residents of Eldon need to look at is when you have a tourism draw like the American Gothic House and the number of people that brings in from outside, those visitors will shop at the convenience store, the grocery store,” said Ottumwa City Councilman Brian Morgan.

The issue Ottumwa faced was the public questioning where the LOST money went, Morgan said.

“It goes through the city budget, so residents still do have some say on where that goes, so it’s not just, ‘There’s my penny and I’m out of the loop now,’” Morgan said. “It’s worked into the budget, where it has to be accounted for.”

Wapello County Supervisor Greg Kenning said of course no one likes taxes.

“The government has three ways of raising taxes: on property, on income and on consumption,” Kenning said. “Local governments are pretty much restricted even further. Their only source of revenue stream they have is property tax.”

But LOST is a way to put in place a type of “surtax” on consumption, he said.

“This tax has enabled communities to lower property taxes, while at the same time recover the same services,” Kenning said.

One thing is certain, Kenning said. If Eldon voters do not approve the renewal of the sales tax in March, by Dec. 1, the city will be out at least $93,000 every year.

Eldon Mayor Shirley Stacey said she was faced with two ways to recover from the sales tax renewal’s failure in the general election: hold a special election to give voters another chance or change the city’s way of budgeting, which would mean either cutting services or looking for other ways to raise that lost revenue through an increase in property taxes or water and sewer rates.

“Personally, I would rather pay that one penny for the next 10 years than have taxes raised or water and sewer rates raised,” Stacey said.

For a small community, Eldon has a lot going for it, Stacey said, with more than 12,000 visitors per year at the American Gothic House Center, the new American Gothic Performing Arts Festival coming to the restored McHaffey Opera House in June, the Wapello County Fair, American Gothic Days and more.

“All these things do bring revenue into the city, but if we don’t collect tax revenues, we get nothing from the other towns of Wapello County,” she said. “They’ll reap the benefits from all those taxes.”

Wapello County Supervisor Jerry Parker said if the tax is voted down again in March, Eldon will miss out on around $1 million over the next 10 to 12 years.

“The thing you have to look at is why say no?” Parker said. “Maybe you don’t like the city council. But you’re not getting even with them by saying no, you’re hurting yourself, because then you have to be part of the solution to gain back that $100,000.”

Parker referenced the $101,000 that Eldon received through the sales tax in fiscal year 2011.

And Eldon is at its taxing limit for the general fund, said Eldon City Clerk Carrie Teninty.

“You’re going to lose services, and you can’t lose that,” Parker said. “There’s no government entity that can lose 25 percent of its revenue and provide services. This is one of those no-brainers.”

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