Tension remains after Johnson County backs off sales tax proposal

City officials say county ‘threatened,” treated them like ‘children’

By Gregg Hennigan, The Gazette

IOWA CITY — Johnson County’s supervisors on Wednesday shelved a proposal seeking sales tax money from area cities for a courthouse project, but not before further exposing the tension between local government officials.

The move comes after city officials complained the county was threatening them and treating them like children.

More importantly, Coralville rejected the county’s sales tax-related plan, which would leave the retail-rich city’s revenue out of the potential pot distributed to Johnson County governments.

“This was an opportunity, and clearly the city of Coralville doesn’t want to participate and assist on this particular issue, and that is their right,” Board of Supervisors Chairman Terrence Neuzil said at a work session.

The dispute centers on two issues expected to be on the Johnson County ballot in the Nov. 4 election.

One asks voters to approve what’s called a local-option sales tax, which would increase the sales tax to 7 percent from the current 6 percent.

The other is funding for an annex to the existing county courthouse that could cost more than $30 million.

The supervisors had asked area cities to dedicate 10 percent of their local-option sales tax revenue, if the tax is approved, toward the county courthouse annex.

On Friday, the supervisors sent officials in Johnson County towns a letter saying they’d set the length of the tax at 10 years in communities that contribute to the courthouse. Those that do not, they said, would only get the tax for three years.

Iowa City called for the election, which it can because of its size, but the supervisors get to set how long the tax is collected, often called the sunset.

That letter rubbed city officials the wrong way.

“It wasn’t a request at all,” Coralville council member Bill Hoeft said. “It was a demand. And in my opinion, it went from demand to threat” with the different sunsets.

The Coralville City Council said Tuesday night it would not commit 10 percent to the courthouse. If the county had followed through with a shorter sunset for Coralville, it would have significantly reduced the amount of tax revenue collected.

If a 1 percent local-option sales tax had been in place for the entire county in fiscal year 2013, about $18.8 million would have been collected, according to the Iowa Department of Revenue. Without Coralville, which is home to Coral Ridge Mall, that amount would have decreased an estimated 44 percent, to $10.5 million.

North Liberty agreed to the county’s proposal, albeit reluctantly.

“I wish the county would not have had such sharp language and treating the municipalities like we are children needing to obey what they do,” North Liberty council member Chris Hoffman said.

Neuzil mockingly congratulated city council members who have said the county was guilty of threats or extortion.

“You are officially politicians of your communities,” he said.

He said the county’s intent was to reduce how much the county taxes property owners to pay off the courthouse bond.

Supervisor Rod Sullivan alluded to Coralville’s controversial use of tax increment financing and other tax strategies.

“I can go on, and I have gone on, on what I think of Coralville and taxes,” he said.

For good measure, Supervisor Janelle Rettig criticized Iowa City for asking for a 10-year sunset and for seeking a vote this November at the same time as the courthouse measure.

She even suggested pulling the courthouse off the ballot, saying there was no momentum with the campaign. The other supervisors did not respond to that comment, however.

Neuzil and supervisors Pat Harney and John Etheredge said they’d support a 10-year sunset for all jurisdictions.

Sullivan and Rettig oppose the sales tax.

Iowa City has said it would put 10 percent toward the annex if the cities it borders and the county do the same. City Council member Susan Mims said Wednesday she wasn’t sure what the city would do now, but she was happy to hear the sunsets all will be the same.

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