Tax legislation Iowa lawmakers passed earlier this month raises questions and poses challenges for the state’s taxing bodies, including the city of Bellevue, according to city administrator Abbey Skrivseth.
The Iowa House and Senate, in bipartisan votes, passed a bill that caps property tax levies for cities and counties.
The bill will phase in over a four-year period starting with next year’s budget. The bill requires that by 2028, the maximum property tax levy for all Iowa cities will be $8.10 per $1,000 of taxable valuation.
Earlier this year, the Bellevue City Council approved a $11.71 tax levy for the upcoming fiscal year, which starts July 1. The bill takes effect the following year.
The bottom line, according to Skrivseth, is that the city will have to find a way to reduce its expenses or begin spending its cash reserve.
For Bellevue, the difference between a levy of $11.71 and $8.10 amounts to about $375,000.
Skrivseth said she hopes the Legislature will come to realize the financial hardship the levy cap will create for small, rural cities that do not have a fast-growing tax base.
“The City Council will have some tough times and decisions ahead if the legislators move forward with this. Budget work sessions could be stretched longer. Department Heads might have to get creative in finding ways to get their jobs done,” she said.
Skrivseth also said she hopes the Legislature in the future will consider some kind of relief by walking back the legislation.
“This does put Bellevue in a tough situation as our tax asking is our general funds. Our general funds include our fire department, police department, paid EMS paramedic, senior/community center, municipal swimming pool, parks, streets, and part of the clerk’s office,” she explained. “Tax Increment Financials (TIF) in a way is also supported by the general fund as it reduces what is available from property tax revenue to the general fund. TIF is how the Stamp Property was purchased. TIF is also what is supporting the Downtown Incentive program. General fund loans are also paid - currently a fire truck and Felderman Park Trail and Bridge project are both being paid from general obligation loans.”
The concern is, how and where would the Bellevue City Council decide to cut? Skrivseth said there will be tough choices, but hopes it does not affect public safety.
“The City has ad 24/7 police for at least the past 60 years, which everyone can agree we want a safe town and round-the-clock coverage helps keep crime down and minimizes crime at night; some small towns have 28E agreements with county sheriffs, but it can take time for a officer to respond and arrive for a call,” said Skrivseth, who noted the police department (and public safety in general) are one of the largest items in Bellevue’s annual budget, and essential for the community.
“We our fortunate to have a great Fire Department, a department that has the necessary equipment and training needed to protect our town. A couple years ago the Council decided to pay for a full-time paramedic, as EMS volunteer numbers and volunteers daytime availability were down in the department. How do you put a value on savings someone’s life with this paramedic?,” she said.
She also noted the city took the step to contribute money to get the senior center back open, as the city council wanted to support senior citizens.
“Then there is the city swimming pool. We have a pool group working hard to raise funds for a new pool and the community as a whole appears to be in support; how does the city support a new pool - both the proposed general obligation loan along with the increase in operating expenses?” she said. “Our pool is already losing money each year as does every municipal pool in the state. What about our parks? We have organizations that use our ball diamonds, rent might have to start being paid. Parks also do not make money but parks are what makes our town beautiful and enjoyable for families. Will the council need to consider reducing staff or moving people to part-time in departments such as the Clerk’s Office or those who maintain our parks and keep them looking beautiful?”
While reducing government spending, whether local, state or national, is difficult Iowa lawmakers say folks need relief from property taxes (and from assessments that seem to grow as much as 20-25 percent each two years in Bellevue).
“This is the most comprehensive property tax reform ever, and it pushes local governments to follow the legislature’s example to budget responsibly, invest in important priorities, and provide tax relief to the taxpayer,” according to Carrie Koelker, a Republican member of the Iowa House of Representatives who represents Jackson County.
Chris Cournoyer, a Republican who represents Maquoketa and Clinton County in the Iowa Senate, wrote last week that the property tax overhaul “restores basic levy limitations to control government spending, and eliminates loopholes abused by local governments to exceed limits set by law.”
Effects on the county
The legislation also will impact county governments, capping tax rates that generate the revenue county boards of supervisors spend to maintain services ranging from country road maintenance to law enforcement.
Jackson County Auditor Alisa Smith said it isn’t yet clear exactly how much revenue the county will lose because of the legislation, but she said it will create challenges for county boards of supervisors in at least some parts of the state.
“It’s safe to say some very difficult decisions will likely have to be made,” Smith said.
Mike Steines, chairman of the Jackson County Board of Supervisors, said he wasn’t so sure that Jackson County’s total revenue would be reduced because of the levy cap.
He said the combination of higher assessments on property, a state-mandated “rollback” that limits how much property assessments can increase, and the levy cap make it difficult to project how the legislation will affect county revenue.
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