Despite a well-funded campaign to extend the 1 percent local option sales tax for another 20 years, voters in the Cedar Rapids metro area (Cedar Rapids, Marion, Hiawatha, Robins and Fairfax, vote breakdown here) rejected the May 3 ballot measure by less than a 1 percent margin.
The defeat will be a blow to Mayor Ron Corbett, the City Council and a long list of the city’s largest and best-known employers. Those employers contributed to a fund-raising effort that raised nearly $500,000 to get the message out to the community that the city needed to help fund its own flood-protection system.
Corbett was hoping to head to Des Moines on Wednesday to tell lawmakers face-to-face that Cedar Rapidians had agreed to its part in flood-protection funding.
The “yes” campaign on the local option sales tax raised more than 100 times as much money as its opponents. The “no” campaign was a grassroots effort, lacking the funds for radio or television commercials.
Half of the funds raised over 20 years via the 1 percent sales tax were to be used for a flood prevention system protecting both sides of the river in Cedar Rapids. Corbett had argued that extending the sales tax would improve prospects for the city to receive state and federal funds for the project, estimated to cost approximately $375 million.
Legislation pending in the Iowa House and Senate would allow Cedar Rapids to use $200 million in state sales tax revenues for flood prevention over the next 20 years. The bill cleared the Senate Appropriations Committee last week, and a House Appropriations subcommittee advanced a companion bill on May 3. I doubt the Iowa House and Senate will pass this legislation now that Cedar Rapids area voters have rejected the local option sales tax–unless Cedar Rapids officials have a “plan B” up their sleeves.
Peter Fisher of the Iowa Policy Project and Iowa Fiscal Partnership has argued that creating a “state sales-tax-increment financing district” to fund flood prevention is a “gimmick.” In Fisher’s view, this method conceals real state spending (see also here). On the other hand, Cedar Rapids Gazette columnist Todd Dorman notes that hundreds of small businesses in neighborhoods near downtown will be hurt if the flood prevention plan fails to materialize.
On a related note, the future of the $75 million Cedar Rapids Convention Complex project is uncertain. City officials and Governor Terry Branstad’s administration have not resolved differences over a project labor agreement signed a month before Branstad issued an executive order banning such labor agreements on state-funded projects. On May 3, the Central Iowa Building and Construction Trades Council and the Cedar Rapids/Iowa City Building Trades Council filed a federal lawsuit seeking to force Branstad to honor project labor agreements for construction projects in Coralville and Marshalltown.
The trades councils’ lawsuit said that the governor and the state have breached their contract with the labor councils by eliminating project labor agreements is place before the governor took office. The lawsuit also states that the governor’s action violates the Iowa Constitution regarding separation of powers, Iowa’s Home Rule law and federal law.
The outcome of that lawsuit could determine whether the Branstad administration is able to withhold $15 million in state I-JOBS funds for the Cedar Rapids Convention Complex project. The Iowa Finance Authority threatened to do so in February, and the governor rejected compromises Corbett proposed to honor the project labor agreement as well as the spirit of Branstad’s executive order.
UPDATE: More reaction to yesterday’s vote is after the jump.
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