Property tax rate could drop in Iowa City school district
Exact amount depends on state's per-pupil allowable growth formula
The Iowa City school district likely will lower the tax rate it collects on property owners, but by how much remains a mystery.
A budget proposal for the fiscal year that starts July 1 was released by the district Thursday and says the tax rate could decrease by anywhere between 24 cents to 40 cents per $1,000 of taxable valuation. The exact amount depends on how much money the state gives school districts for each of their students.
That per-pupil funding formula is known as allowable growth. State lawmakers are a year late in setting the rate for next fiscal year, and school districts must adopt their budgets by April 15.
The Iowa City school board on March 5 will review a budget proposal that assumes there will be no allowable growth. But it also has scenarios for 2 percent and 4 percent allowable growth, which are figures being debated at the Statehouse.
With no allowable growth, the Iowa City school district tax rate would drop from $14.07 per $1,000 of taxable valuation this year to $13.67 cents. At that rate, the owner of a $250,000 home would pay about $21.36 more in school taxes next fiscal year.
Taxes would still go up because of the increase in the state-set rollback on residential property, meaning more of a home’s value is taxed.
Commercial properties pay 100 percent of their assessed value, and a $750,000 commercial property would see its school taxes decrease by $302.16 at that tax rate.
With 2 percent allowable growth, the budget proposal calls for a tax rate of $13.75. And 4 percent allowable growth would bring a tax rate of $13.83.
Assessed valuations are up about 2 percent, which helps the school district to lower the property tax rate, said Craig Hansel, the district’s chief financial officer.
It appears allowable growth will increase. The Republican-led House passed a bill setting it at 2 percent, while the Democratic-led Senate approved 4 percent. Gov. Terry Branstad, a Republican, wants his education reform proposals to be settled before addressing allowable growth.
Hansel equated that to “being held hostage,” and the state ignoring the deadline for setting allowable growth is a situation school districts have faced other times in recent years.
The budget for now calls for expenditures to be $168.4 million, which would be 6.9 percent higher than this year. Hansel said the district estimates high on that and the budget has no significant changes from this year.
“Really, the school budget is pretty benign,” he said.
Also Tuesday, the school board will consider proposals to renew two tax levies: the Instructional Support Levy and the Physical Plant and Equipment Levy. Both are in place in the Iowa City school district for two more years, but Hansel said board members are interested in extending them for planning purposes.
The district later this year is expected to adopt a long-term facilities plan, and what sort of money is available to the district for construction projects is an important part of that.
Hansel said school board members have not given any indication that they would change how the levies are being implemented.Both the levies could be subject to voter approval.