The City of Marshalltown has a one percent voter approved local option sales tax (LOST) in place that is collected on sales and services within the City limits. This tax has been in place for a number of years.

On March 5, 2024, voters will have the opportunity to go to the polls and vote to keep the tax in place after its set expiration date of June 30, 2025. As a city, our role is to educate citizens regarding an issue rather than advocating one side or the other.

Over the next few weeks I will share information that will help educate voters in advance of March 5. My focus for this article will be to answer this question: “How does the City of Marshalltown currently use Local Option Sales Tax (LOST) revenue?”

Each year LOST generates approximately $4 million in revenues. Of that revenue, 78% is designated for property tax relief. There are two ways for cities to use revenues for property tax relief:

1) to pay existing debt service payments, or

2) to complete projects with cash on hand to keep from assuming new debt. For the most part, the City of Marshalltown has used the property tax relief funds to pay existing debt service payments.

Some folks ask how that translates to property tax relief. The easy reply is that it decreases the amount of debt that we have to certify to the property tax levy each year. There is a longer answer, which I will explain in a future article where I explore the question “What happens if we do not have a local option sales tax?” You might be wondering what the debt funds were used for. The answer to that is mostly street improvements. There are some other smaller projects and uses, but as a general rule, most of our existing debt service is for street improvement projects.

The remaining 22% is for any legal purpose. I like to call it general city use. It is commonly referred to as council designated here in Marshalltown. Over the years the exact uses have varied, but they generally relate to City operations or community development.

Some of the examples of operational uses include being utilized in the annual budget process to provide essential city services. Paying for a compensation study and wage increases for city staff is another. Stump and tree removal in parks, improving city parking lots, and sidewalk improvements are a few others.

On the community development side, paying for the annual fireworks display probably ranks pretty high for our younger citizens. Other recent uses include downtown site furnishings, new home buyer incentives, sidewalk improvement reimbursements, and military memorabilia display cabinets at the Coliseum.

As you can see, the uses have been varied. We would find even more variety if we were to look back to past years.

As a summary, LOST revenues are used in ways that affect us all. They help improve our streets, improve our community, and help lower our property taxes. As I mentioned earlier, I will provide two more articles on this subject as we move closer to the March 5 special election.

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Joe Gaa is the Marshalltown city administrator.