The City of Hiawatha is proposing a quarter-cent recreation tax that will be on the Nov. 5 ballot for voters to decide upon. If approved, it will go into effect April 2020.
City Administrator Mike Nichols said the tax will replace the post lantern tax that is currently on the books until next spring. If approved, the recreation tax will go into effect April 2020 and not affect the current sales tax of 9 percent. Since a new tax would only be replacing an expiring tax, it would not affect the current sales tax, Nichols stressed that this DOES NOT include the proposed hospital tax of a half cent. If that is passed, the sales tax will be 9.5 percent.
Nichols said that the revenue generated from the proposed sales tax won’t even cover all recreation needs. Nichols said currently, not including the aquatic park, the city budget for parks and recreation is $311,884 and the proposed sales tax will bring in only $175,000 annually. He said most recreation programs through HP&R pay for themselves and generate some revenue for the city. But, he noted the pool takes a loss every year.
Nichols said the city’s parks and City Lake need some definite upgrades and additional funding through a sales tax will help fund those.
In a recent interview with Nichols, he addressed some frequently asked questions about the tax. Anyone with additional questions can contact City Hall at 742-7417.
Q — How much revenue will the sales tax bring in? And who it will it affect?
A — Approximately $175,000 in annual revenue. Currently, money from the city budget – which is funded through property taxes – covers costs incurred for recreation, which includes the city’s parks and City Lake. By creating a revenue source through sales tax, that takes the burden off taxpayers. Currently it takes more than $145,685 of property taxes to help provide these programs and maintain our facilities, which means city residents are paying more than non-residents are for Parks & Recreation. A sales tax will allow for a decrease in property taxes, which will allow for the cost of Parks & Recreation to be spread among everyone who shops in town. This means that those who don’t live in town, but shop here – and possibly participate in athletic competitions within town – would help pay for your Parks & Recreation.
Q — How much will the property tax drop if the recreation tax is approved?
A — The commission has committed to dropping the mil levy by anywhere from 3 to 6 mills – which a mill brings in roughly $23,232 in revenue, based on 2019 appraised values. If it is dropped 3 mills, that equals roughly $34 in savings for a homeowner with a house valued at $100,000 by county appraisal. Or, Nichols points out, someone owning a home appraised at $100,000 would have to spend $13,800 more per year in town than they are now to not see any savings.
Q — Why is there not a sunset proposed for this recreation tax?
A — the commission felt recreation is always a need in the town and as long as the city is here we need that funding.
Q — How do city residents know that the commission won’t replace the mill levy drop in upcoming years with something else since that does not require a public vote?
A — It is possible but, I can say the current commission is committed to dropping those mils and keeping them off but there’s no guarantee a future commission couldn’t reverse it down the road.
Q — What will the sales tax go towards?
A — The sales tax will help us continue to provide the many youth programs and community activities we currently do (some at no cost to participants), add new ones, and make much needed upgrades to our parks and facilities.