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Iowa education backers hope to extend sales tax for schools

July 29, 2018

DES MOINES, Iowa (AP) — As they call for more money for classrooms, Iowa school advocates hope legislators will extend a sales tax levy that pours millions of dollars each year into infrastructure and technology for the state’s public schools.

Bipartisan negotiations over the past couple years have resulted in a plan to extend a statewide 1 cent sales tax for another 20 years to fund school infrastructure projects while limiting the need for schools to issue bonds that drive up property taxes. The efforts have been underway as funding for school aid remains a hot-button issue with regular partisan clashes.

A bill was overwhelmingly passed by the Iowa House last spring to reauthorize the sales tax, known as the Secure an Advanced Vision for Education program, but the Senate never voted on it. Legislative leaders indicated they plan to revisit the issue in January.

“It is going to be a top priority coming into this next session,” said state Sen. Dan Dawson, a Council Bluffs Republican who managed this year’s bill.

Dawson said the sales tax extension was a victim of an eleventh-hour push for $2.1 billion in property tax cuts that passed in the final hours of the legislative session. He said state senators didn’t want a second major piece of tax legislation at the end of the session, and there wasn’t enough support to bring it to the Senate floor.

Legislators will have a clearer picture of tax revenue estimates next session, Dawson said. He expects the “consensus strategy” developed around expanding the sales tax will carry over into the 2019 session. In the meantime, schools should receive more than $22 million in new sales tax revenue this fiscal year, according to an analysis by the Iowa Department of Revenue.

Emily Piper, a lobbyist for the Iowa Association of School Boards, said the Senate had some holdouts who view the sales tax extension to be a new tax, which they oppose on ideological grounds. Piper said the agreement is that legislators will spend some of the proceeds of a sales tax increase on providing property tax relief while still giving the majority of the money collected to schools.

“The commitment is there from Republican legislators to take a serious look at it next year,” Piper said. “This is not a partisan issue.”

Despite that optimism, some school districts have stopped waiting and are pressing ahead with bond issues backed by property taxes. The Council Bluffs Community School District, for example, announced Tuesday it would ask voters this fall to approve $37 million in bonds — backed by property taxes — to renovate two middle school

Troy Arthur, president of the Council Bluffs school board, said he worries that interest rates will spike before the sales tax could be extended. Arthur said he feels not acting in past years “missed an opportunity” to lock in even lower rates, but that “millions of dollars in interest” can still be saved by acting soon.

Other schools are adopting a wait-and-see approach.

Brad Buck, superintendent of Cedar Rapids schools, said his district has a facility plan in place to consolidate 21 elementary schools into 13 buildings over the next 15 years, with the aim of saving $2 million annually in operational costs — money that would instead of spent on instruction. Buck said Cedar Rapids hopes to use sales tax dollars to pay for the projects.

The first district to use sales taxes for infrastructure was the Sioux City Community Schools, which saw a local option sales tax approved by Woodbury County voters in 1998. Similar local levies were replaced by the statewide tax in 2008. Sioux City is currently updating a school built in the late 1800s, said superintendent Paul Gausman, noting the district continues to have facility needs.

Critics have argued the sales tax revenue has sometimes been squandered on lavish athletic facilities and other wasteful projects. The House bill would have mandated a cost-benefit analysis and allowed voters to petition for a referendum on any proposed spending for athletic facilities.

Sibani Ram, a senior at Dubuque Senior High School, advocated for the sales tax expansion as part of the nonpartisan State of Iowa Youth Advisory Council. She said the sales tax revenue allows her school to provide students with laptops. Dubuque spends $2.5 million in sales taxes on technology purchases each year.

“Every textbook has links that you can explore online to further your understanding,” Ram said. “It also improves our communication with teachers.”

The Des Moines Public Schools estimates that sales tax projects have resulted in $15 million in savings from energy efficiency and other improvements, according to Bill Good, the district’s chief operations officer.

Louisa Dykstra, a parent with two children in the Des Moines Public Schools, said the district has made a lot of progress on improving its schools, but more needs to be done across the state.

“Our buildings are in a lot better shape, but now we need to keep things going as far as security and technology,” Dykstra said. “We don’t want to slide back into what we were.”

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