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Ask Mr. Answer Person: How are local option sales tax revenues used?

Posted: Tue, Oct 10, 2017 2:15 PM

(Tony e-mails Mr. Answer Person: "Where do the local option sales tax revenues go?  I'm interested in City of Decorah figures."):

Mr. Answer Person says: "According to the State of Iowa code, 'Local option tax revenues can be expended for any lawful purpose.'  For most local governments in Northeast Iowa, these revenues have been used to pay for road projects.  That's the case with Winneshiek County and also with the City of Decorah.

In Decorah, the money was used most recently for the Short Street project.  That $2.7 million plus project was done in 2012.  

If you're wondering why more road projects aren't paid for with local option sales tax money, it's because the costs of building or rebuilding a road has been increasing faster than local option sales tax revenues have been.  In 2016, the City of Decorah received $951,286 in local option sales tax revenues.  2017 revenues are expected to be $1,052,742.  On the one hand, that's a lot of money.  On the other hand, it would take three years' worth of local option sales tax revenues to pay for the Short Street project.

So the extra sales tax has provided a new surface for Short Street in Decorah.  But it's not enough to pay for redoing Locust Road, East Main Street and several neighborhood streets all in one year, for instance."