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Bonanza for local governments or savings for taxpayers?

- Gretchen Tegeler is president of the Taxpayers Association of Central Iowa

Local governments in central Iowa are putting together their budgets for the upcoming year that begins July 1, 2016. This is known as fiscal year (FY) 2017.

While they’ve been gradually improving, times have been tight for local governments since about 2012, when the 2009 real estate market collapse began to play out on local budgets. Property taxes are based on property valuations, so some local governments actually had to make do with little or no revenue growth in their budgets for these past several years. Costs marched on unabated (or increased in some cases, as for public pensions), so there was stress to make budgets balance.

This year, the story is entirely different. Taxable valuations (upon which the property tax rate is applied to generate property tax revenue) are up substantially for most local governments, and a constant tax rate will therefore yield huge increases in revenue. This means there is opportunity for reduction in rates. (Notes: Schools' rates are largely set through a state formula, so their situation is different.)

Our association is always urging citizens to look at the property revenue generated, not the property tax rate, to see how much money their local government is actually collecting. If ever there was a year to be clear about the distinction, this is it!

Consider the increase in property tax revenue that would be generated in the following selected jurisdictions, just from a flat rate, at a time when inflation is projected to be less than one percent:

Increase in 2015 Taxable Valuation, by Government Entity
For FY 2016-17 Budgets

Polk County

6.2%

Dallas County

6.3%

Broadlawns

6.2%

DART

6.2%

City of Ankeny

11.8%

City of Des Moines

4.7%

City of Waukee

9.2%

City of West Des Moines

6.7%

These are also the percentage increases that taxpayers will be seeing on their property tax bills next September and in March 2017 if downward adjustments in rates are not made.

Local governments have a choice to make. They can build the growth into their budgets and substantially increase their spending, or they can set a more modest spending goal, return some money to taxpayers, and perhaps set a more stable course for the future. The circumstances of each entity are different, but citizens should be asking their local officials what they plan to do, and why, before budgets are finalized on March 15th.

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