Sales tax bill could bring new cash to BV schools

Monday, April 14, 2008

A bill working its way through the legislature in the final days of the session could bring over $2 million in new funding to the Storm Lake School District and $3 million in potential property tax relief to taxpayers in the district over the next several years, according to the office of the Speaker of the Iowa House of Representatives.

But all is not as rosy as it sounds, says local Rep. Gary Worthan of Storm Lake, who voted against the hotly-debated bill, which passed the House 59-41 Wednesday and remains to be approved by the Senate and Gov. Chet Culver to become law.

House File 2663 proposes to replace the current local option sales tax with a 1 percent statewide school sales tax that would divide money equally to all schools on a per-pupil basis.

It is estimated that Storm Lake schools would get slightly more than $300 more per student initially, or $2.26 million more income over the first six years.

At the same time, the bill proposes to lighten the property tax load somewhat on property-poor districts, shifting the burden toward sales taxes, which proponents suggest is more equitable.

Worthan, however, is worried.

"We have a local option sales tax system that is working. Look at Storm Lake - the district is building a large new elementary school without raising taxes. I can't imagine how that could have been done without the local option support. It would have taken big tax increases to cover the cost of the bonds to build it."

No Storm Lake schools officials had contacted Worthan to push for the change. "Not a word," he said.

Under the appoved bill, all of the money collected from the sales tax would go into a pool to be doled out equally to schools on a per-pupil basis.

"My main concern is that when local option sales tax went into place in 1998 the promise was made that it would always be a local choice about whether or not people would tax themselves or not.

"It gave residents the power to evaluate how the districts were spending their money. This takes that all away."

Districts would have the option of spending their revenue for new projects - using it to spend down debt, to reduce property taxation on residents of their district, or to spend it on new developments - one possibilty locally could be a performing arts auditorium in Storm Lake to replace South School, which has been a goal for years but is not currently funded.

Bit Worthan also worries that the use of the money is not constitutionally-protected. "There is nothing that says how the money has to be used, and knowing state governement, in some future year, I'll bet it could look real attractive to someone to have that pool of $460 million a year sitting there to dip into in order to balance a budget."

House Speaker Pat Murphy, however, blasted Worthan and others who chose to vote against the measure. "It unfortunate that Rep. Worthan voted against the people he represents to side with special interests instead," he said.

According to the Speaker's office, area schools under the plan would see school funding increases over six years of the following amounts:

Storm Lake $3,292,952

Albert City-Truesdale $282,833

Alta $648,375

Aurelia $$348,375

Galva-Holstein $534,903

Laurens-Marathon $439,111

Newell-Fonda $529,291

Schaller-Crestland $453,156

According to Worthan, the bill evolved primarily to help the Des Moines metro area, not rural Iowa.

"In Polk County, local option tax was going to expire in two years and there was a lot of worry that voters would not re-approve it because they are mad that the money they thought was going into education was used to build a big sports arena instead," the local representative said.

He also said that a portion of revenue from the change would be going straight to the state general fund and would not be given to the schools. "Estimates are that around $40 million in pure tax increase isn't coming back to the districts at all," he told the Pilot-Tribune.

Also, nothing dictates how schools spend the income, Worthan said. He would have liked to see a definition that required money to be used for buildings or other educational purposes similar to that in place for local option tax revenue.

"Governor Culver has said that maybe half the money should be taken and used for teacher salaries - well, in my book, that isn't what you would call property tax relief," the Storm Lake Republican said.

Worthan said that representatives of some schools had urged him to vote for the proposal - but what they have not been made aware of is that the local option tax would have also gone to an equal statewide per-pupil basis in a couple of years as schools re-approved 10-year taxation.

"The old system would have evened out, it just would have taken a couple years to get there," he said.

That "evening out" is crucial, Worthan admits. Currently, schools in the Dickinson County area where there is high tourist retail spending get $1,200 per student, while one rural district he is aware of sees little spending and gets only $82 per student.

The bill's chanced in the Senate are uncertain, as the legislature is pushing for an adjournment that could come as early as the end of next week, Worthan said.

"This is controversial, and I'm sure I will catch some flack from the local superintendents."

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