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Guest comment: "Plan B" for raising additional money for repairs to Iowa's roads and bridges

Posted: Sun, Oct 20, 2013 7:16 PM

(This guest comment is from former Winneshiek County Board Chairman Dean Darling, who is offering what he calls "Plan B--An Alternative to A Fuel Tax Increase to Finance Our County Roads, Streets and Bridges.")

This article assumes from the outset that there is a definite and serious need for additional funding to improve our deteriorating roads, streets and bridges.

It also assumes that as responsible adult citizens we recognize and accept that we must pay more in order to achieve these necessary improvements.

For several years now there has developed a general consensus that an increased fuel tax (of, say, the frequently cited 10 cents per gallon) is the best way to garner additional revenue to fund these improvements.  County Engineers, Boards of Supervisors, Truckers Union, AAA, and the Farm Bureau have been strong advocates of the fuel tax increase.

Unfortunately, nothing significant has happened!  Why?  Because state legislators are acutely aware of intense public resistance to virtually any tax increases and incumbent legislators see no future in committing political suicide by introducing (or voting for) an increased fuel tax, especially when the Governor might well veto such legislation.  Legislators know they would be subject to political attack from candidates aspiring to replace them, even in primary elections.

What is Plan B?

Plan B is an idea which draws from three existing concepts, all of which stem from legislation already in effect.

The first concept relates to how our public schools are partially funded.  As those readers who study their state income tax forms well know these forms provide for a surcharge for their local school district of a percentage of their state income tax bill.  (Each school district sets their surcharge percentage, which can be as high as 20 percent.  In Winneshiek County these percentages range from zero to 15 percent.  Turkey Valley is zero, Postville 15 percent, North Winn 10 percent, all others from 6 to 8 percent).  There seems to be little resistance to school district surcharges as they offset the alternative of higher property taxes.

Plan B would use this surcharge concept.  Legislation would "allow" each county to independently have a public vote on whether or not to adopt a surcharge dedicated to County roads, streets and bridge improvements, and what that surcharge percentage would be.

State income tax payers in Winneshiek County pay a total of some $15 million yearly (2011 data, the latest available).  Each 1 percent surcharge would raise $150,000 for road, street and bridge improvements.  10 percent would raise $1.5 million.

Who Gets the Money?

The second concept concerns how such surcharge funds would be distributed.  Plan B would again draw upon existing legislation, using the formula that exists for distributing the one-cent local option sales tax revenue.  Winneshiek County would receive from the state nine surcharge checks, one for each of the eight incorporated towns and one for the rural area, each based 75 percent on population and 25 percent on each entity's taxable valuation, again, as done in the distribution of our local option sales tax revenue.

Third Concept

The third concept draws on the recent legislation that became effective on January 1st of this year.  This legislation gives the County Supervisors authority to impose, by ordinance, a local income surtax. (There are limitations:  the imposed surtax may not exceed one percent, and the total of all surtaxes within a county may not exceed 20 percent.)

The difference in that with Plan B the county surtax could come into effect only after a majority vote of the public.

Plan B vs. A Fuel Tax Increase

I limit here the comparison of Plan B with the fuel tax increase to only some political issues involved, along with a dash of financial data.

The fuel tax increase may well be a better way to garner more revenue for roads, streets and bridge improvements.  One major advantage is that it would enjoy taxes collected from "pass through" drivers.  And, as mentioned earlier, this approach has strong support from important constituents.

But the increased fuel tax approach has gone nowhere.

This is where Plan B could succeed.  No one would impose anything.  Legislators would only be giving the individual counties - actually the county voters - the authority to impose a surcharge on themselves.  Legislators would not be vulnerable to charges of imposing any tax increase.  They could correctly state they were only "graciously acceding" to demands for more revenue for road improvements by allowing counties to raise the necessary revenue.

Some approximate data.  A 10 cents  per gallon fuel tax increase would generate approximately $700,000 yearly for all of Winneshiek County, some $500,000 for the rural area, some $140,000 for Decorah and roughly $55,000 for the other seven incorporated cities.

Plan B, if adopted with a 10 percent state income tax surcharge would provide $1.5 million annually for all of Winneshiek County.  Using the distribution plan proposed above, would provide some $780,000 for the rural area, $570,000 for the City of Decorah and $150,000 for the other seven towns, again, based on relative population and taxable valuation of the political entities.

Conclusion

Give this Plan B some thought.  It is usually good to have an alternative, and it appears we may need one.  Any productive comments would be appreciated.  However, we must be thoughtful and realistic.  To want better services at less or no cost is just not going to happen.