Culver signs 1-cent school tax into law
SIOUX CITY, Iowa — Gov. Chet Culver signed a new 1-cent sales tax to pay for school infrastructure projects into law Tuesday in Sioux City, characterizing it as a secure funding source for schools and a way to provide relief to property taxpayers.
The new statewide tax replaces the 1-cent local option tax approved by voters in all 99 counties, so consumers likely won’t notice a difference at the cash register.
Supporters say the statewide tax, which goes into effect July 1, will help funnel dollars more equally to school districts that didn’t have the retail base to generate sales tax revenue the way some urban districts did.
“Students in this state will now have an equal education,” Culver said. “It doesn’t matter whether you live in Sioux City, Des Moines or Denison, our kids will have an equal education.”
An estimated $400 million would be generated by the state tax each year and distributed to schools based on an enrollment formula.
On average, school districts would see an additional $200 per pupil each year, according to Culver’s office.
Sen. Jeff Danielson, D-Waterloo, was one of the measure’s backers and said it upholds an Iowa value of fairness.
“First and foremost, it means every Iowa child will have an equal opportunity at achieving their God-given talent,” Danielson said.
With his trip to Sioux City, Culver signed the legislation in the hometown of one its chief critics in the Legislature, House Minority Leader Christopher Rants.
Rants, a Sioux City Republican, said the statewide sales tax represents a broken promise to voters.
Unlike the local-option sales tax, which must be approved periodically by voters in a county, the statewide tax would not need the blessing of voters.
“Ultimately, that’s my biggest problem with this bill, is that we told the voters they would always have ultimate control over it, and we’re taking away voter approval,” Rants said.
Rants fears the money generated from the tax will end up being used for other purposes than the infrastructure projects it is intended for, such as teacher salaries and benefits.
Businesses also will be stuck with a 1 percent higher use tax under the legislation, Rants points out.
Rants said that means a tax increase, primarily on businesses when they pay for services, business-to-business transactions or purchases from out-of-state.
Rants also is skeptical that money will be used for property tax relief.
“When I actually see my property taxes go down, I’ll believe it,” Rants said.
Rants acknowledges the Sioux City district stands to gain from the statewide sales tax, but felt there were other options to help equalize how much money schools districts received.
Jeff Boeyink, president of Muscatine-based Iowans for Tax Relief, said they intend to make the statewide sales tax an issue this election season.
“People in support of it can scream ‘equity’ all day long. We’re going to talk about the fact that people’s right to vote was stolen away,” Boeyink said. “We’re going to talk about the fact that businesses in their communities are going to pay a significant tax increase.”
Charlotte Eby can be contacted at (515) 243-0138 or chareby@aol.com.