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Iowa City Council reviews local option sales tax, franchise fees to close budget shortfalls
Summary
City staff told councilors on Dec. 10 that local option sales tax (LOST) could yield about $8.8 million annually for Iowa City but requires voter approval and must allocate 50% for property-tax relief; councilors pressed for public engagement and cautioned against funding recurring operations with a volatile revenue stream.
Iowa City — City staff briefed the Iowa City Council on Dec. 10 on alternatives to property-tax revenue, including franchise fees and a possible 1% local option sales tax (LOST) that would require voter approval and a legally required allocation of at least half the revenue to property-tax relief.
"Cities in Iowa can levy a sales tax up to 1%." City staff (Speaker 4) said while explaining the mechanics and limitations of LOST and comparing it with franchise fees.
The staff presentation outlined several constraints and figures: a franchise fee may be set up to 5% on gas and electric (Iowa City currently has a 1% fee); staff suggested adding a second 1% to help sustain fare-free transit and noted a 1% on both gas and…
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