Voters in Ocheyedan, Melvin, Harris, Ashton and the rural areas of Osceola county will go to the polls Tuesday, August 4, to determine the future of the proposed local option sales and service tax (LOSST). Sibley residents approved the one percent sales tax increase last year when the other voting jurisdictions in the county rejected the measure.
Mary Forristal, Iowa Department of Revenue, held meetings in Harris and Ocheyedan Monday to provide information on the sales tax and its potential implications for county residents.
Forristal told a handful of people in Ocheyedan Monday night that when the tax was originated in 1986, two towns in two counties adopted it.
"As of July 1, 2009, 1,012 of the 1,100 voting jurisdictions in the 99 counties have adopted the tax," Forristal said.
Each of the surrounding counties, Lyon, Sioux, O'Brien, Clay and Dickinson, have already adopted the additional one percent sale tax. In fact, according to information provided by Forristal, only Johnson County (Iowa City) does not have at least one voting jurisdiction collecting the tax. Additionally, only nine of the state's 99 rural jurisdictions have not passed the measure, according to Forristal.
The tax, she explained, passes or fails in each voting jurisdiction and the funds are distributed to either the cities or county board of supervisors based on a formula taking into consideration both population and property taxes levied. Seventy-five percent of the money is distributed by population, based on the 2000 census, and the remaining 25 percent on property taxes levied using the years July 1, 1982 through June 30, 1985.
The added one percent is attached to the same items which are subject to sales tax, according to the state official.
"That includes tangible personal property such as books, clothing, jewelry and furniture," she explained. "If it's subject to state tax, it's subject to LOSST."
The agricultural sector has several specific exemptions. They include utilities used in ag production, machinery and equipment used directly and primarily in agricultural production, replacement parts for exempt farm machinery and feed, seed and other such items sold by a cooperative, according to Forristal.
Agricultural items that are taxable include labor, hand tools, supply items, real property and vehicles subject to registration.
Forristal went on to note that the local option sales tax attaches where delivery occurs or the service is performed. A similar rule applies to utilities, for which collection of the tax is based on the billing address.
In response to a question about the purchase of LP from a Sibley business, which has the tax, for an Ocheyedan residence, which currently does not, Forristal said, "If the fuel is delivered to Ocheyedan, currently the tax would not be collected but if you go to Sibley and pick it up, it would be taxed."
The official noted that anything subject to a "use" tax is exempt from LOSST taxation.
* Distribution estimates
State officials prepared two different distribution estimate scenarios, which Forristal provided to those in attendance.
Assuming that all jurisdictions would approve the tax, Ocheyedan would receive 6.64 percent of the funds collected; Harris. 2.34 percent; Melvin, 3.03 percent; Ashton 5.69 percent; the unincorporated areas 47.75 percent; and Sibley 34.55 percent.'
Total collections were estimated at $352,500 with an estimated total distribution of $522,564. Forristal explained the additional amount distributed would come from outside the county.
The state's breakdown of estimated dollars projects Ocheyedan would receive $34,692; Harris, $12,210; Melvin, $15,820; Ashton, $29,750, Sibley $180,568; and unincorporated areas $249,524.
The second scenario projected distributions if, for example, the rural area did not approve the tax. Under that scenario, Ocheyedan's share would increase to 12.75 percent; Harris 4.25 percent; Melvin, 5.85 percent; Ashton 10.91 percent; and Sibley 66.25 percent.
Under that scenario, collections would total approximately $338,000 and distributions about $508,000. Ocheyedan's share of that total would be approximately $64,800, Harris, $21,600; Melvin, $29,700; Ashton, $55,400; and Sibley, $336,500.
Prior to the election, each voting jurisdiction is required to designate how the funds would be used. Mayor Arlyn Pedley told the gathering Ocheyedan plans to use the money for buildings, parks and streets.
"The road use tax dollars are going down. We have already not done some streets and we can tell it so we want to use it to keep the streets up to snuff," he explained. "There also never seems to be enough money to go around to do building repairs and we also want to continue with our park improvements."
While Forristal's presentation focused on the positive aspects of the tax, when asked if there are any disadvantages, she responded, "There will be an increase in some consumer costs, but if you buy products or services anywhere else, you pay it anyway and the money goes to that county."
Osceola county residents, except for the City of Sibley, will vote Tuesday, August 4. Absentee ballots are already available, according to Barb Echter, county commissioner of elections.
Forristal directed anyone wanting additional information to the state's website, www.state.is.us/tax. Questions may also be directed to her at mary.forristal@iowa.gov or by telephone at 712/258-2807. Information can also be obtained through the county auditor's office, 712/754-2241.
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