T-R PHOTO BY ROBERT MAHARRY Marshalltown City Administrator Joe Gaa, left, addresses the city council about a proposal for Local Option Sales Tax (LOST) reauthorization while councilors Mike Ladehoff, Greg Nichols, Jeff Schneider and Gary Thompson look on during Monday night’s meeting.

During a lightly attended meeting Monday night, the Marshalltown city council voted to set a special election on the reauthorization of the one percent Local Option Sales Tax (LOST) with a modification in the formula for how the revenues would be split, which did garner further discussion from both councilors and the public.

As it currently stands, 78 percent of LOST dollars the city receives go to property tax relief, while the remaining 22 percent are allocated for “council designated” uses — which, according to a memo included with the council packet, indicates any “legal purpose” with Council approval. “In many cities, including Marshalltown, that means utilizing LOST to fulfill needs in the annual budget. Looking ahead to (Fiscal Year) 2025, balancing the budget to maintain services should be considered a top priority,” the memo reads. “Also a high priority that is in the early stages is to update our street maintenance program. In addition, having funds available for needs that come up during the year is important to maintaining fiscal health and responsibility.”

The voting public approved the current formula in 2017, and the proposal before the council was to shift it slightly so 75 percent of the dollars would go to property tax and the council designated uses share would increase from 22 to 25 percent. City Administrator Joe Gaa explained that a committee of city staff and councilors met earlier this year before he started on the job to iron out the details, and he lamented the idea of the council designated funds being seen as a negative.

“When I hear people say that, it’s like they’re saying bad words. And I just want to clarify that a little bit,” he said. “When you talk about council designated, it’s not just waiting for a rainy day. It’s balancing the budget. Sales tax needs to be used to complement property tax in our operating budget.”

He said he has frequently heard questions about doing more residential street maintenance and said that if it would come from anywhere, it would likely be this fund. Gaa agreed with the idea of saving some money and added that he didn’t feel any of the recent uses of the dollars had constituted “bad spending.”

“It’s good and it’s spreading it around the community, so I do think all of those are important. I just think maybe we need to educate the community a little more as we go into the budget process,” Gaa said.

Al Hoop was the first councilor to speak up on the motion and said he didn’t like the idea of lowering the amount that goes to property tax relief.

“You’re taking away what the idea was to have it,” he said.

Fellow Councilor Gary Thompson went further and opined that with the semi recent addition of revenue from Automated Traffic Enforcement (ATE), the LOST allocation should shift to 100 percent property tax relief, and Councilor Greg Nichols asked for numbers on what the different formulas would mean in actual dollars and cents.

Finance Director Diana Steiner reported that in Fiscal Year 2023, the city brought in about $4 million in LOST, meaning about $3 million of that would go to property tax relief. During the public comment period on the matter, Doris Kinnick said she agreed with Thompson and Hoop that property tax should be “the most important thing,” citing her own divorce back in 2017 as a strain on her personal finances. She also took issue with the lack of a sunset clause in the wording and hoped to avoid a “forever tax.”

A motion to approve the modified formula and set the special election on the reauthorization for March 5, 2024 passed by a 5-2 vote with Thompson and Hoop opposed.

In other business, the council:

• Approved the consent agenda as listed.

• Accepted a bid of $44,425.82 from Brothers Concrete for Peterson Park improvements.

• Approved the authorization of TIF indebtedness to the county auditor for each urban renewal area with the city of Marshalltown for FY25.

• Approved the annual financial report for FY23.

• Approved a loan agreement for the issuance of $9,840,000 in general obligation corporate purpose bonds and providing for the levy of taxes to pay the same.

• Approved the second reading of an amendment to the code of ordinances regarding no parking areas during snow removal operations and waived the third and final reading.

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Contact Robert Maharry at 641-753-6611 ext. 255 or rmaharry@timesrepublican.com.