Homeowner property taxes would rise, commercial taxes unchanged under budget plan

City Manager Jeff Pomeranz this week will present his first Cedar Rapids city budget to the City Council, a budget on Monday he called both fiscally conservative yet “progressive” and one that raises residential property taxes by an average of 7.84 percent but holds commercial and industrial property taxes where they now are.

The proposed tax increase for homeowners will add $84 to the city's portion of a residential property owner's tax bill, increasing it from $1,071 to $1,155 for the owner of a $150,000 house. Some homeowners may see higher increases, some lower depending on how much the value of their individual property has changed. The city's portion of the overall local property-tax bill is less than 50 percent of the total bill. The school district, Linn County and a few smaller entities also obtain revenue from property taxes.

In his proposed budget, Pomeranz, who joined the city on Sept. 20 after 12 years in West Des Moines, makes room for an assistant city manager, gets rid of six temporary slots in code enforcement and includes two in-school police officers.

About two-thirds of the city's roughly 1,200 full-time employees are represented by bargaining units, and those employees, all of whom have multiyear contracts in place, will see an increase in wages of 2.5 percent. Those in the group who also are positioned for a longevity, pay-step increase will see an additional 2.5-percent increase.

At the same time, the third of city employees who are not represented by bargaining units will receive pay increases of .5 percent plus 2.5-percent pay-step increases if they are positioned for a step increase in the next budget year.

The City Council will sort through Pomeranz's budget at meetings at 5 p.m. Tuesday and Thursday.

The proposed budget also calls for the city's overall rate for its package of utility services - water, wastewater, sanitary sewer, storm sewer and solid waste/recycling - to increase 4.8 percent in the next budget year, which begins July 1, 2011. For the average homeowner, the utility-rate increase will increase the monthly utility fee from $69.67 to $73.01 or $40.08 a year.

Pomeranz's proposed balanced budget calls for holding the city's portion of a Cedar Rapids property owner's current tax rate where it is, $15.22 per $1,000 valuation.

However, for the city's residential property owners, the other two components of the property-tax calculation have changed because of actions taken by the state of Iowa. The state Department of Revenue has determined that overall residential values in Cedar Rapids need to climb 4.3 percent. And at the same time, the state's “rollback” formula has increased the percentage of a residential property's value subject to property tax from 46.9 percent to 48.53 percent.

The state of Iowa did not order any adjustments to the overall commercial and industrial valuations in the city, and neither commercial nor industrial property is subject to a rollback. Unlike residential property, both classes of property pay tax on 100 percent of the value of their property.

The increase in taxes to residential property owners should generate an additional $4 million in revenue in the $99-million general operating budget, the total of which is increasing about $350,000 from the current fiscal year.

The budget eliminates a planning position in the Community Development Department and an administrative assistant post in the city manager's office, both of which are vacant. Savings from the two jobs will allow for the hiring of an assistant city manager, which a citizen task force has recommended in recent years but which has not been funded.

Pomeranz said the assistant city manager, in part, will focus on economic development.

The proposed budget also retains the post of flood-recovery director in the city manager's office, though Pomeranz said the job title might change. Flood-recovery Director Greg Eyerly announced his resignation on Friday to take a job in the private sector.

Pomeranz said the city's departmental directors had submitted more than $50 million in additional requests that are not being funded in the proposed budget.

Among items not being funded is a request for 16 additional firefighters.

Pomeranz noted that the city must pay an additional $1.2 million into the state police and fire pension system, which has taken hits to its investments in recent years. The additional payment means the city will pay an amount equal to 24.76 percent of the wages to police officers and firefighters into the pension system, up from the current 19.9 percent. A year from now, the amount is projected to grow to 29.31 percent and the following year to 37.33 percent, at which time the city's contribution should retreat.