After a couple of weeks of politicking, the Iowa Senate yesterday approved legislation that will make the School Infrastructure Local Option Sales Tax (SILO) statewide until 2030 and change the distribution of funds.
The one-percent sales tax, currently collected in all 99 counties in the state becomes a statewide tax and the per pupil distribution formula will change, ending the inequity in the current tax.
Currently, retail rich counties are receiving as much as $1,000 per student from the tax, which can only be used on buildings, technology and busses. Rural counties that don't have much retail activity are receiving as little as $558 per student.
The new law will change that, moving to an equal distribution per pupil, bringing equity to what has been a statewide sales tax for several years. The measure had passed the House on April 9 and passed in the Senate yesterday after much political drama, with the majority leadership declaring the measure dead after learning of Republican opposition. Republicans offered an alternative tax which they said would have protected taxpayers and kept the "option" in SILO with voter approval remaining a part of a new law.
Some taxes will go up, others will go down. Utility taxes for Iowa families will go down about $12 million a year. Goods purchased out of state and delivered to Iowa will be subject to the SILO tax, which will bring in an estimated $32 million a year. In some school districts, property taxes may go down with SILO proceeds paying for building projects instead of property taxes.
When the SILO was passed in 1998, it was intended to create a new funding source for property poor districts to build or repair their schools. The authors of the original measure could never have foreseen the bill becoming a very visible measure of the divide between urban and rural Iowa. Some districts are currently receiving as little as $350 per student, while others receive over $1,000, thanks, in part to purchases being made in urban shopping areas by rural and out of state customers.
We urge the governor to sign this measure and finally create true funding equity for education in Iowa.