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The second-day story, with your help. Call Gazette reporter Adam Belz at (319) 398-8273 or e-mail him: adam.belz@gazcomm.com

Sales Tax Question #1

Q. Have there been any guarantees that if the local-option sales tax is passed that there will not be any increases in any of our other taxes, ie. property tax, etc.? – Gary Riley, Toddville

A. The answer is no, at least in the city of Cedar Rapids. There have been no such guarantees, though sales tax revenue would help offset property taxes.

Most of the sales tax money will go to pay for buyouts or flood home rehabilitation. About 1,346 homes need to be bought out, and that will cost roughly $200 million.

But 10 percent of the revenue is slated for property tax relief. By our calculations, if 10 percent equals $1.8 million per year, the city will be able to cut whatever levy rate they arrive at by 38 cents per $1,000 valuation.

This wouldn’t mean that the city will lower property taxes, though. City Finance Director Casey Drew’s initial budget presentation raised the residential levy rate by $1.56 per $1,000, which would be a 14 percent increase. If the sales tax were to pass and the levy rate decreased by 38 cents, the net change would still be an increase of $1.19 per $1,000.

The city council sent Drew back to the drawing board and asked him to write a budget that doesn’t increase property taxes by more than 5 percent. Even then, taking a best case scenario in which the budget called for a 5 percent increase in property taxes and the city cut 38 cents off the levy rate using sales tax revenue, property taxes would still rise a little.

The Linn County share of the property tax levy (that is, the property taxes people pay for Linn County government) will actually drop in the coming fiscal year.

P.S. I am trying to respond to reader questions about the sales tax over the next week. Please e-mail or call with your questions, at adam.belz@gazcomm.com or (319) 398-8273.

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Filed under: Cedar Rapids City Council, Flood, , , ,

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