Initial Iowa City budget proposes tax rate drop

IOWA CITY - Iowa City property owners face a slightly lower tax levy under an initial budget proposal released by the city manager's office Wednesday.

But homeowners would pay more in taxes because of an increase in the percentage of a residential property's value that is subject to taxation. That number is known as the rollback and it is set by the state. For the budget year that begins July 1, it is 46.91 percent, up from 45.59 percent for the current year.

The proposed budget calls for a tax levy of $17.83 per $1,000 of taxable value, down 0.13 percent from $17.85 this year.

At that rate, the owners of a $100,000 home would pay $836.33 on the Iowa City portion of their tax bill, up from $813.89 this year.

Overall, but proposal calls for a general fund budget of $58.1 million, down from $63.5 million this year.

The City Council will have the final say on the budget and will start meeting on it next month. The budget must be certified by March 15.

The budget includes the hiring of nine new firefighters to staff a fire station to be built on the northeast side of town. It also has the addition of six police officers.

The council approved a 2 percent franchise fee on natural gas and electric services to help pay for the positions.

The city, like most governmental bodies around the state and nation, has been struggling because of the recession. Two of the bigger culprits in Iowa City have been relatively flat property valuations - the city's largest revenue source is property taxes - and lower interest income, interim City Manager Dale Helling wrote in a memo to the council included in the budget proposal.

He added that the city's ability to expand and sustain services “will remain constrained for the foreseeable future.”

For more on this story, read Thursday's Gazette.