LOST AGAIN Ian Binnie

Project Destiny's proposed three county local option sales tax increase is 16.7% to its opponents and 1 cent to its proponents. Both are correct but its proponents have correctly decided that a 16.7% increase in any tax would be a hard sell. A 16.7% increase in, say, income tax would not get out of the starting blocks but as the poor pay more of their income in sales tax than they do in income tax that is in effect the prospect they face.


A similar semantic problem arises with that perennial promise, "property tax relief." A common (and common sense) interpretation suggests that you will pay less after relief than you are paying now. But for our elected officials it simply means that your next increase will be less than it would otherwise have been. And there is no way under Iowa law to make the promise of a "dollar for dollar" reduction in property tax binding on the many taxing jurisdictions involved. "Trust us" is not exactly a convincing argument. And "Trust our successors" even less so. The Des Moines City Council’s devotion to property tax relief is particularly suspect given its annual pilgrimage to the statehouse to lobby the legislature to remove the cap on property tax.

The proposal, like Caesar's Gaul, is divided into three parts.

The first third is the property tax relief referred to above. If it does materialize it will provide a windfall for federal and local governments; property tax is income tax deductible - sales tax is not. It is unclear how all this is to work for homeowners and a clearer explanation would be helpful but if it is indeed "dollar for dollar" it appears that those in the lower tax suburbs might well get a higher percentage relief than those in high tax Des Moines as would those who live in partially abated homes no matter where they live.

The next third is to finance projects that would normally be paid for by property tax and is being characterized by some as also being property tax relief. This is a bit of a stretch. This is new money for new projects and is clearly a tax increase. To be fair the drafters of the proposal acknowledged that when they did not include it with the property tax relief of the first third.

The last third is perhaps the most controversial of all, a $20 million dollar slush fund to enhance the local "quality of life." I prefer to decide for myself what enhances my quality of life rather than have others decide it for me and I suspect that most traditionally individualistic Iowans feel the same way.

Mandated in this third is the Holy Grail of the Des Moines City Council, property tax equalization with the suburbs. 20% of the final third will be distributed to the various jurisdictions based on the amount of tax exempt property they have. This means that Des Moines will get most of it.

The fund will be administered by a committee of fifteen appointed by elected officials. We have recently seen how well that works. Nine will be from Polk County, three from Warren and three from Dallas. This is no doubt logical based on present population ratios but as a practical matter it gives Polk County de facto complete control. Non-budget decisions (whatever they are) will be by a simple majority of eight so here Polk County can do what it likes. Budget decisions (distributing the money) require a two thirds majority of ten. All Polk County has to do is to cut a deal with one of the representatives of Warren County (the poor relation of the trio) and Dallas County will have no say in where its money goes.

Some have already spotted a potential danger in passing this measure, its effect on the renewal of the local option sales tax for schools which is looming on the horizon. There is a limit to the public’s appetite for sales tax increases and there is already smoldering discontent with broken promises and questionable expenditures in this area. If Project Destiny passes, "enough already" might well be the reaction when school tax renewal comes up.

We should be able to disagree without being disagreeable and I have no doubt that the Project Destiny leaders have the best of intentions but as my mother never tired of pointing out, "The road to hell is paved with good intentions."