Cedar Rapids: No layoffs from abatement cut

City Manager Jim Prosser says he won't recommend that the City Council lay off city employees to cope with the loss of $1.6 million or more in expected property-tax revenue that is likely from not taxing more than 2,600 flood victims.

Prosser said on Monday that layoffs aren't his option of choice while the city is in the midst of recovering from the June 2008 flood.

The city manager was responding to word from Linn County that 2,611 flood victims will have their property taxes abated, given that they lost the use of their properties after the flood. Linn County officials on Monday estimated the revenue loss at $3.8 million.

The majority of that loss is absorbed by:

l City of Cedar Rapids - Loss of $1.6 million (or 42 percent of total).

l Cedar Rapids school district - Loss of $1.44 million (38 percent).

l Linn County - Loss of $600,000 (or 16.4 percent).

The city, however, likely will lose even a larger share and the others less because some of abatement will come from properties in tax-increment-financing districts, from which the city receives 100 percent of the incremental increase in property tax for use in those districts.

Steve Tucker, finance director for Linn County, said he wants to wait for a clearer picture of the revenue fallout before he considers how Linn County might deal with the issue.

The city's Prosser noted he and the City Council have agreed, as a first option, to ask the Iowa Legislature for help. The city's property-tax-supported general fund budget is about $90 million.

If that doesn't happen - and Gov. Chet Culver has announced 10 percent across-the-board cuts because of declining revenues - Prosser said the city would look at drawing down its fund balances. A tax increase also can't be ruled out, he said.

Cedar Rapids school Superintendent Dave Benson said last night the district could lose $1.6 million because of abatements, on top of the $8 million from state budget cuts. The district will use reserves to cover the losses, he said.