Cedar Rapids property taxes could rise 4.15 percent
Flood insurance, pensions, library costs affecting budget
City Manager Jeff Pomeranz will present his "hold-the-line" budget to the City Council on Tuesday evening that, if approved, will raise the city’s portion of the local property-tax bill for the average homeowner by 4.15 percent for the fiscal year beginning July 1.
This increase in property-tax revenue to the city is coming, in part, because of a state of Iowa "rollback" formula that will make 52.8166 percent of a residential property’s value subject to property tax, up from 50.75 percent in the current budget year.
The proposed city budget keeps the city’s tax rate of $15.22 per $1,000 valuation the same as the current budget year. The tax rate will remain the lowest among Iowa’s largest cities, but for Dubuque, Pomeranz noted.
In the end, the owner of a $100,000 home will pay $804 in property taxes to the city — about 40 percent of the total bill — in the new budget year, an increase of $31.
In addition, the proposed city budget calls for the city to increase its franchise fee on electric and natural gas bills from 1 percent to 2 percent, an increase that will generate $3.2 million in new revenue for the city’s proposed $110-million general operating budget.
The franchise fee, which is a recent addition to the city’s revenue-raising options, touches any property owner that pays an electric or gas bill. That includes churches and hospitals that don’t pay property taxes, the city’s principal funding source for city services, Pomeranz said in an interview on Monday.
"It helps us broaden the tax base," Pomeranz said of the franchise fee.
Pomeranz said the need for additional revenue in the proposed new budget is coming because costs are rising. Wages and salaries for city employees are projected to increase by 2 percent, for instance.
The city also will be paying $1.1 million more a year for flood insurance and will be contributing $1 million more a year -- $7 million a year up from $6 million this year — to the state Municipal Fire and Police Retirement System of Iowa. In the current year, the city must pay an amount equal to 26.12 percent of police and fire salaries into the pension system, and next year, it’s 30.12 percent.
In addition, the city’s new downtown library is coming on line in August, a move that will require the city to restore the library to a staffing and operating level similar to what it had before the June 2008 flood, which destroyed the library and forced the operation into temporary quarters at Westdale Mall.
Pomeranz and Casey Drew, the city’s finance director, said the costs for the library will increase about $1 million in the next fiscal year. About $500,000 of those cost will be paid from revenue from the city’s local-option sales tax. The sales tax revenue will be used on the library’s construction, and an equal amount of private library funds designated for construction will be shifted to library operations, Pomeranz explained.
The proposed budget also calls for the users of the city’s package of city utilities — water, wastewater, sanitary sewer, storm sewer and garbage/recycling — to increase 3.4 percent.
Pomeranz said the only significant spending initiative in the proposed new budget is the addition of five new staff positions to help implement the City Council’s new nuisance abatement program. The program includes criminal background checks on prospective renters and better coordination between landlords and the city to help with nuisance properties and nuisance tenants.
"It’s going to be a safer community with strong neighborhoods," Pomeranz said.
The City Council must approve the new budget by March 15.
The city accounts for about 40 percent of the local property-tax bill in Cedar Rapids with the school district and Linn County accounting for most of the rest.