Homeowners face tax on more of their property's value; will mean about $1.15 million more for City Hall at current values and levy rate

City and county governments and school districts across Iowa, always in the hunt for revenue, have gotten a little boost from the state of Iowa's rollback formula, which determines what part of the value of property is subject to property tax.

In the current budget year, 45.56 percent of the value of a residential property is subject to property tax, but in the next budget year, which begins July 1, 2010, that percentage goes to 46.91 percent.

The tax on commercial and industrial property remains the same, at 100 percent of value.

In Cedar Rapids, the residential rollback change will mean the owner of a $150,000 home, who is now paying $1,041 in annual property taxes in the city portion of the overall tax bill (which also includes county, schools and a few smaller entities), will pay $1,071, according to Casey Drew, the city's finance director.

That's a 2.9 percent increase.

In Iowa City, which has a higher tax levy rate than Cedar Rapids, the 2.9-percent increase will mean the owner of a $150,000 home will pay $2,756 a year for the city portion of the tax bill, up $78 a year, Kevin O'Malley, Iowa City's finance director, said Friday.

O'Malley said the rollback change would bring in an additional $673,044 a year for the city of Iowa City using today's current residential property values and tax levy rate. Iowa City has a current annual property tax-supported budget of about $63 million.

In Cedar Rapids, Beth Weeks, chief deputy assessor, estimated on Friday that the residential rollback change using the current residential property values and tax levy rate would raise an additional $1.15 million a year for the city of Cedar Rapids. The city has a current annual property tax-supported budget of $92 million.

A property owner's property-tax bill also is impacted by the tax-levy rate - the current rate in Cedar Rapids, for instance, is $15.22 per $1,000 valuation while the current rate in Iowa City is $17.85 per $1,000 valuation. Local elected officials set the rate as they adopt budgets in the first part of the year. Elected officials, for instance, could drop the levy rate to offset the tax increase caused by the change in the residential rollback. More likely, elected officials won't do that, but they won't need to raise the levy rate as much because the rollback change will bring in more revenue.

Any change in the value of a property owner's property also affects the size of a property owner's tax bill.

The state rollback on agricultural land in Iowa has changed from 93.86 percent of value to 66.27 percent of value, a dramatic change because farm land has jumped in value, Cedar Rapids' Weeks said.