September 2007

Protecting the People’s Voice

by Amy K. Frantz

A proposal by the Iowa Association of School Boards (IASB) would replace the school infrastructure local option (SILO) tax with a statewide one-cent sales and use tax. The IASB proposal makes this funding stream permanent and takes away the right of voters to decide if such a tax should continue to be implemented in each county.

The Iowa Legislature adopted the SILO tax mechanism in 1998 to give school districts an alternative to raising property taxes for funding for certain infrastructure needs. According to the Iowa Code, SILO funds “shall be utilized for school infrastructure needs or property tax relief.…‘School infrastructure’…activities include the construction, reconstruction, repair, demolition work, purchasing, or remodeling of schoolhouses, stadiums, gyms, fieldhouses, and bus garages and the procurement of schoolhouse construction sites and the making of site improvements.”[1]

The voters in each county must approve a SILO tax before the tax can be collected. A SILO tax can only be approved for a maximum of ten years.  At the end of that period of time, the school districts in the county must ask the voters to again approve the SILO tax to continue its collection.  Additionally, the legislation that established the SILO tax also states that all local option taxes for school infrastructure purposes will be repealed on December 31, 2022.

The current SILO tax system requires the school districts in our state to make a case to voters for the necessity of collecting the additional tax for school infrastructure spending. School districts must return to the voters every ten years, giving Iowans a chance to reject an extension of the SILO tax if they believe that a school district has not lived up to the promises made during the previous vote.  Limiting the time period for which the SILO tax can be collected ensures that school districts must be accountable to local voters.

Voters in Linn County and Johnson County approved the SILO tax earlier this year, with the SILO tax being collected in those counties beginning on July 1, 2007.  With these last two counties’ approval of the tax, all 99 counties in Iowa are now collecting the SILO tax.  This is evidence that if local school districts make an acceptable case for the need for a SILO tax, the voters are willing to approve such a tax for a limited time.

The Iowa Association of School Board’s proposal would take away the people’s right to vote to approve or reject a SILO tax. The SILO tax would be replaced with a statewide one-cent sales and use tax.  Voter approval would not be necessary for the collection of the new statewide sales and use tax.  It would instead be on auto-pilot, continuing indefinitely, even beyond the date in 2022 when the SILO tax would be repealed under current law.  Rather than the SILO tax, which periodically requires voter approval, the additional cent of sales and use tax would be a permanent tax.

The SILO tax is limited to being used for school infrastructure projects and local property tax relief. These limitations would not apply to the statewide one-cent sales and use tax increase.  These funds could be used for other purposes, such as increasing teacher pay, leaving school infrastructure needs unmet and requiring an increase in property taxes, on top of the statewide sales and use tax, to keep schools open and operating.  If voter approval is not necessary, it will be much easier to increase our overall tax burden.

Local control over the educational system is best – after all, who knows better what a school district needs than those people who live in that district and have children in the local schools? The Iowa Association of School Boards believes that local citizens should not have a say in whether or not an additional one cent of sales and use tax is collected for school infrastructure funding and local property tax relief.  Iowans deserve to have a direct voice in whether or not our taxes should be increased.  Is it so unreasonable that the school district should have to ask before taking more money from local voters?

Amy K. Frantz is Senior Research Analyst at Public Interest Institute. 

The views expressed herein are those of the author and not necessarily those of Public Interest Institute or Tax Education Foundation. They are brought to you in the interest of a better-informed citizenry.

[1] Iowa Code chapter 423E.1 (3), <> (August 20, 2007).