Iowa City school district lowers tax rate proposal

Property owners in the Iowa City school district may not see as much of a tax rate increase next fiscal year as was first thought.

District administrators are recommending the school board adopt a tax rate of $14.69 per $1,000 of taxable value for the year that starts July 1. That's a 3.52 percent increase from this year, but lower than the 7.39 percent increase the board included in the budget plan it published last month.

Since then, the state has finished its budget, and schools got more money than they had expected. Iowa City had been projecting a $12.9 million shortfall in state aid, but the final state budget reduced that number to about $4 million.

The school board will vote on the tax rate and budget at its meeting Tuesday.

Administrators originally proposed a 14.9 percent tax rate increase, but the school board said that was too high. It was then suggested the district tap into school infrastructure local-option sales tax money and not levy the full amount of the physical plant and equipment levy to bring that down.

The new numbers do not rely on either of those options, and Superintendent Lane Plugge said Friday he feels a lot better about this budget than the initial draft.

“In these tough economic times, to have a 15 percent increase, that was too great of an increase,” he said.

Plugge did warn that the district's cash reserves possibly would be too low to handle another midyear cut like the one this fiscal year. If that happens, the district probably would have to borrow money from the local-option sales tax fund or borrow from a lender, he said.

At the new proposed rate, the owners of a $100,000 home would pay $689.16 on the school portion of their taxes, up $42.19 from this year.