Council tables sales tax ballot language

Apr. 17—OTTUMWA — Three weeks ago, four of five Ottumwa City Council members during a work session seemed fairly convinced a different redistribution of sales tax revenue would benefit the city, certainly in the short term.

At Tuesday's council meeting, when a resolution to bring that distribution to a ballot came forward for a special election September, some council members balked and decided they needed more time to weigh their options.

The council, on a 3-2 split vote, tabled the item to talk about it more during a work session Tuesday at the Amtrak Depot. The current distribution of the sales tax is 90% for streets and sewers and 10% for property tax relief, and will expire December of next year. The proposed split for a Sept. 3 referendum is 80-20.

Ironically, council member Doug McAntire made the motion to table, and was joined by Bill Hoffman Jr., both of whom voiced approval for an 80-20 split at the work session March 26. Only council member Keith Caviness expressed support for keeping it the same.

Cyan Bossou and Cara Galloway, proponents of an 80-20 split who voted against tabling the ballot language, were the most disappointed by the motion to table.

"I just worry that we're postponing this only to come to the same exact result at our next meeting, because the reality is that it's highly unlikely we can go back to the 90-10 split," Bossou said. "I would also say that other council members should come prepared to discuss those cuts that we are going to have to make so we don't have to do this again."

The local option sales and service tax, a 1-cent tax people pay on goods in addition to state sales tax, has been at 90-10 since voters approved it about a decade ago. In that time, the 90% portion has allowed sewer rates to stay the same, while also providing some funding for the city's ongoing sewer-separation work. Currently, the city has received about $4.5 million annually in sales tax revenue.

However, revenue sources are drying up in other areas of the city's budget as a result of state legislative actions, and moving to an 80-20 split would provide more property tax revenue to the general fund to offset depleted revenue over the next few budget cycles.

Both city finance director Cole O'Donnell and city administrator Philip Rath said reductions are coming in some form, whether it's sooner or later. That doesn't necessarily mean personnel, but the city must look for ways to become more efficient, they said.

"This is more like a tourniquet in that it will slow the bleeding, but it's not going to stop it," Rath said of the city's options for revenue. "It's not going to sew up the wound. This is a patch to get us through."

O'Donnell said if the state takes over local option sales tax, a topic that has gained momentum in the legislature, the council will probably be disappointed.

"There is discussion that the local option sales tax, which our citizens vote upon, will be taken over by the state," he said. "They will start distributing the funds to us and we can still decide where it goes, but I can guarantee you that at some point, we're not going to get what we're getting now, or we're not going to get increases."

Caviness held his ground on a 90-10 split, expressing his desire to go through departments to see what can be eliminated.

"We need to start saving money, not spending money," he said. "I don't like this, 'We're going to cut people right away.' There are other areas we can look at. I don't remember a consensus of 80-20."

Galloway asked Rath for a clearer explanation of what "reduction" meant, because she believed the city has spent its money responsibly.

"Over the last few years we've been trying to reduce anything not essential. But when you get down to providing services, you're talking about personnel costs, you're talking about equipment and training," Rath said. "In the past the council has talked about succession planning. Could we reduce some of those soft costs? Yes, but you're further putting things behind when you're talking about training and preparing people for the next position.

"So when we have to knock off 40 cents (from the general fund levy) over the next four years, there's a cost to that."

Rath also said the city's general fund will now be absorbing the costs of Bridge View Center and library levies as they are no longer supported by their own levy.

McAntire said it's important to "look out for the property tax people," but there needs to be other ways to boost the general fund.

"We need developers coming into town and putting a little more into our pocket," he said. "We shouldn't be scared they're going to leave. There'll be a lot more money in that general fund just doing that."

Whatever need to be cuts, making an 80-20 distribution could put those off into the future. However, O'Donnell said the city would try just about anything else before cutting payroll.

"The last thing we want to do is start cutting people because that really does start cutting services," he said. "In my statements I've said we've had to make reductions, and I've also said we're looking at improving efficiencies, which we'll do first.

"We'll look at everything, but there's a lot that has to be looked at."

— Chad Drury can be reached at cdrury@ottumwacourier.com, and on Twitter @ChadDrury