University Heights, a small suburb on the west side of Iowa City, is implementing a new sales tax to make up for lost traffic camera revenue. The state legislature recently passed a law that forced towns to shut down their traffic cameras.
On Sept. 10, the University Heights community held a special election to decide on a local option sales and services tax. Just 102 of 722 registered voters showed up to the polls to decide on this tax, which passed, 76-26.
With the new tax kicking off on Jan. 1, 2025, residents and leaders of University Heights are reflecting on the new rule.
“Adding the penny to the sales tax came up when we had a budget shortfall,” University Heights Finance Director Nick Herbold explained. “We had anticipated income from speed cameras in town and the state legislature created a law that we couldn’t have those.”
Herbold referred to House File 2681, signed into law on May 17, as the initial reason for implementing the new tax.
The law restricts communities under 20,000 from issuing tickets on their cameras. The two traffic cameras that the town had in place were only active for two months before Iowa Gov. Kim Reynolds signed the bill into law.
The sales tax will add 1 percent to the already 6 percent tax. Many cities and counties across Iowa have implemented one. Neighboring Linn County passed a sales tax in 2021, estimating around $6 million would be generated from this tax, which will be used towards secondary road maintenance, property tax relief, construction, as well as conservation projects throughout the county.
Johnson County currently does not have a sales tax passed.
RELATED: Lower-income Iowans paying higher property taxes, report finds
University Heights is looking to use 50 percent of the revenue acquired towards property tax relief with the new tax.
“That 50 percent of the proceeds used for property tax relief will benefit us all,” Patty Yeggy, a University Heights resident, said during the public comment section of the May 28 University Heights City Council meeting.
With the tax waiting to be implemented until the start of the new year, businesses are preparing for the change.
“The thing that will affect me more than anything as a business owner is the percentage of credit card fees I have to pay,” Katy Herbold, resident and owner of Sidekick Coffee and Books located in University Heights, said.
Sidekick has been a staple of the community since its opening in 2019. Located under One University Place, it features a cafe and walls of children’s books, and families frequent the shop. Many students use this space as a hub for studying away from campus.
Along with Sidekick, University Heights is home to four businesses: Barre 3, Maggie’s Farm Pizza, and Stella’s. University of Iowa students and residents who live within University Heights and in the surrounding areas will have to prepare to pay a little extra for their morning cup of coffee come January.
“I am sure I will hear some things about it. The people that are most affected by it are the people that live closest to the shop, they are our largest customer base.” Herbold said.