Early voting is now open in Iowa and will be until Nov. 3, Election Day. The ballot in Greene County towns poses two special question to voters, both relating in some way to taxes. We need to pass one and to defeat the other. That’s confusing in itself, and local voters would benefit from more public discussion of the two issues before they answer those questions.
Both questions are referendums. One would extend the existing local option sales and service tax (LOSST) for municipalities. That’s the one that should carry. The other would require a two-thirds “yes” vote in each house of the Iowa Legislature to increase state personal income or corporate taxes. That’s the one voters should reject.
The LOSST issue first.
Iowa allows municipalities to charge consumers a 1% local option sales and service surtax on top of the state’s 6% tax on taxable sales and services. In Iowa, food, prescription drugs and prosthetic devices are exempt from the sales tax. Sales of other items, and most services, carry sales tax.
Nearly all municipalities in the state have elected to charge the 1% LOSST tax on top of the state’s 6% tax. There’s a very good reason for that, especially now. The Legislature has clamped down on local government budgets, to the extent that without the LOSST tax, it would be difficult for a city or a county to provide basic services.
Jefferson is a good example. The LOSST tax here, by the code, MUST be used solely for infrastructure expenses and related uses. Included in that list are streets, sewers, sidewalks, water mains and city buildings, among other items. Jefferson’s annual budget relies on about $600,000 a year from the LOSST tax for infrastructure needs.
Arithmetic makes it crystal clear: the city would have a very tough time maintaining its existing infrastructure and improving it without that $600,000.
Jefferson has had LOSST for many years. The code up to now has included a “sunset” date for when the 1% sales tax expires, and periodic renewal has therefore been necessary. The proposal on this year’s general election ballot would remove the sunset date, and reenacts LOSST in perpetuity.
That would enable the city to make long-term plans to meet its infrastructure needs.
Voters in all the other Greene County towns will have an identical LOSST renewal question on their ballot, and in all cases the renewal would make LOSST permanent.
The Greene County Board of Supervisors has also renewed and made perpetual its LOSST authorization for purchases made outside the town limits in the county.
The LOSST renewal is logical, simple and necessary for basic public needs. A simple majority would continue it. Local voters should vote “yes” on the question.
The other issue on the November ballot would be dangerous for Iowa.
Called “Amendment One,” it would amend the Iowa Constitution to require a two-thirds majority in each of the two legislative houses to increase state personal and corporate income taxes. That means just 17 Iowa Senators, or 34 Iowa Representatives, could block any state income tax increase.
The amendment doesn’t change the voting margin required to REDUCE income taxes.
Only the margin to INCREASE them.
That’s undemocratic. If you think that word aligns you with the Democratic Party (spoiler alert: it doesn’t), then call the proposed amendment unfair. Just plain unfair.
Iowa is now spending over a billion dollars a year more than it takes in in taxes. If it weren’t for the state’s reserve funds — the cash reserve fund, the taxpayer relief fund, the economic emergency fund — the budget would be well into the red. That’s not permitted by the Iowa Constitution.
To balance its budget, the state is now drawing down its reserve funds. In a few years, if the current course continues, the reserve wells could run dry. Then the Governor and the Legislature would have to make some hard decisions: significant spending cuts or tax increases, or both.
If Amendment One is part of the Iowa Constitution at that point, and hardline tax hawks in the Legislature refuse to increase the income tax, where do they go? To the only major revenue source available to them: the sales tax.
For well-to-do Iowans, a sales tax increase would be inconvenient. But for lower income residents, it would be a true hardship. The sales tax takes a larger percentage from families of modest-income residents than it does from the well off, and folks with lower incomes are already having a tough time making ends meet.
Advocates of Amendment One are banking that the state’s economy will recover enough to bring the budget back into balance, where it was before the draconian income tax cuts of recent years. In fact, Governor Reynolds and Republican legislative leaders have made no secret of their long-term goal: complete elimination of the state income tax.
The recent economic history of Iowa challenges those odds. The state trails most of the nation in economic growth.
Amendment One passed the Legislature in its two most recent sessions. The state’s constitution provides that when that happens, the proposed amendment goes to the voters in a referendum. The Governor has no say one way or the other.
So it’s up to us to decide how much power we want to give legislators who oppose the income tax.
Why should my Senator, for example, be given twice as much power as yours to decide the proper level of state income taxes? That’s not the way Iowa usually does it. Equality — one person, one vote — has always been a hallmark of the state’s culture.
The Iowa motto is “Our liberties we prize and our rights we will maintain.” Amendment One doesn’t measure up.
Rick Morain is a reporter and columnist with the Jefferson Herald.
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