A look at LOSST

The March 5 referendum for voters in the unincorporated portion of Greene County has big implications for the county’s property tax levy. If it fails, the county’s secondary roads department have to choose: either forfeit about $250,000 in state road use tax funds, or raise rural property taxes by that amount.

A “yes” vote on the two ballot questions about the Local Option Sales and Service Tax (LOSST) in the unincorporated part of the county won’t change the level of the one percent LOSST that’s currently being levied. Nor will it reduce or increase the level of funding for the current uses of the LOSST money.

But a “no” vote would directly put a squeeze on the county’s secondary road fund.

Here’s why:

Iowa law stipulates consequences for counties that provide less than 75 percent of their own funding for secondary roads. If a county furnishes less than that percentage, then the state reduces that county’s share of the state road use tax fund by that amount, dollar for dollar.

Greene County holds its rural property tax levy low enough that by itself, that tax levy doesn’t generate enough money to reach the 75 percent level. In order to reach that level, the county uses about $360,000 of its share of LOSST money. (The county’s LOSST share last fiscal year totaled about $575,000.)

The total of the two funding sources—property tax and LOSST—pushes the county’s share of its road funding up to about 81.6 percent this year, well above the 75 percent minimum required to receive the county’s full share of state road use tax money.

But if LOSST were eliminated, Greene County would be about $250,000 below the 75 percent minimum level, and would thereby lose that much in state road use funds. According to Greene County Engineer Wade Weiss, even more would be in jeopardy if the shortage continued. To maintain the secondary road fund at an acceptable level, Weiss said, rural property taxes would have to be increased by the absent $250,000.

Weiss added that his department has asked the board of supervisors for a three percent dollar increase this coming fiscal year, but that request is unrelated to the LOSST situation. The three percent increase will go either into construction and general road expenditures or into the department’s carryover balance, Weiss said.

There’s another factor involved in the March vote on LOSST: the county’s plans for long-overdue heating, ventilation, and air conditioning (HVAC) improvements in the courthouse.

Greene County has about $1.8 million in federal American Rescue Plan Act (ARPA) funds from the legislation enacted in 2021 during the COVID epidemic. The board of supervisors plans to spend those funds for the courthouse HVAC improvements.

But the total estimated cost of the HVAC project is $3.4 million. That leaves a gap of about $1.6 million even after the ARPA funds are counted in.

So after the board makes its annual budget LOSST designation of the $360,000 to secondary roads, another $45,000 annually to the sheriff’s department for vehicles, and its final annual payment of $50,000 to Jefferson’s Children’s Center child care center, what’s left every year in LOSST money would be earmarked for principal and interest payments on bonds for the HVAC improvements.

What makes the LOSST vote particularly important now is that by law, the federal ARPA money has to be obligated by the end of December this year. It then has to be spent by the end of calendar year 2026. Without the special LOSST wording vote, the HVAC project would be in jeopardy.

The county’s bonding attorneys informed the supervisors that the county’s current requirement to spend the LOSST funds “100% for rural property tax relief and any other lawful purpose of the county” would not allow LOSST money to be used to retire bonded indebtedness.

So as a result, the March 5 special vote for the unincorporated portion of the county asks those voters to approve new wording that states simply “100% for any lawful purpose.”

On first reading, that sounds as if rural property tax relief would no longer be allowed for LOSST funds usage. That’s not the case, as County Engineer Weiss and the supervisors explained. Under the new wording, the secondary roads department will use the county’s LOSST funds as it has been doing, and so will the sheriff’s department for vehicles. Those are lawful purposes.

Those expenses will continue to replace what otherwise would have to come from property taxes. The wording change is being made in order to comport with legal language for bonding purposes, not to change how the current LOSST funds usage works.

Yes, it’s complicated. But the bottom line is that LOSST fund current usage designations would continue, and in addition, the county would have a way to improve the aging HVAC equipment in the courthouse.

The current wording of the county’s LOSST situation requires LOSST to end (“sunset”) after 2027. The special election vote would remove the sunset requirement.

I have to take the bonding attorneys at their word that the wording change to the county’s LOSST usage is necessary in order to make the bonds legal. I hope voters in the county’s unincorporated areas will do so too.

Polling locations for rural voters are as follows: Central Precinct, Clover Hall at the Fairgrounds in Jefferson; East Precinct, St. Brigid Parish Center in Grand Junction; North Precinct, Churdan Library in Churdan; and West Precinct, Scranton Community Center in Scranton.