Ankeny voters to decide on sales tax increase
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Photo: Courtesy of the city of Ankeny
Attention, Ankeny shoppers: Those items at Costco may become a little more expensive following a special election.
Why it matters: The city of Ankeny is holding a special election to approve a local option sales tax (LOST) on Sept. 8 to help the city reduce property taxes and pay for road projects.
How it works: In Iowa, everyone pays 6% in sales tax on most goods, except necessities like food, rent and prescriptions.
- Most cities in the state also charge an additional percent for goods bought within their municipalities, raising their sales tax from 6% to 7%.
- Cities must use 50% of the 1% sales tax revenue for property tax relief. The other 50% can go toward capital projects.
State of play: Ankeny Mayor Bobbi Bentz says city officials have long considered holding a special election to approve the increase, and the Legislature's recent decision to cap property tax revenue helped cement it.
Zoom in: The growing suburb, which already has the lowest property tax rate in the Des Moines metro, wants to diversify its revenue, Bentz says.
- The once-sleepy community now draws people from all across the metro, and about 50% of sales tax revenue comes from visitors.
- Those visitors could help pay into the city's coffers and infrastructure through the 1% sales tax, which is what Ankeny residents do right now when they shop outside the city, she says.
- For example: Ankeny's Costco, which is the largest in the Midwest, earns 70% of its sales tax revenue from shoppers outside the city. But those visitors are benefiting from the city's amenities without paying in.
By the numbers: City officials estimate they'll garner $12 million in annual revenue.
- They project lowering property tax rates from the current $9.90 per $1,000 of valuation to $9.30 by fiscal year 2028.
- The city's property tax calculator shows that LOST would save an annual $80 in property taxes for owners of a $300,000 home.
Reality check: If you don't own property, you don't get the benefits.
- Sales tax is considered regressive, since lower-income families may not benefit from the property tax relief and are more likely to spend a larger share of their income on goods.
If you go: The election is Sept. 8 from 7am–8pm. More than 50% approval is needed to pass.