Missing form means western Iowa town can't collect property taxes

Blencoe has no legal authority to collect property taxes this fiscal year after it failed to file a 13-page financial report with the Iowa state auditor.

The slip-up will cost the tiny western Iowa town about a third of its $200,000 annual budget, the Omaha World Herald reported Monday.

The missing form is a financial report from the 2010 fiscal year. All Iowa cities follow the same rules. They produce a report wrapping up the previous fiscal year. Then they draw up budgets, identifying tax rates for the coming year estimating how much revenue they plan to collect. While Blencoe filed its budget on time, it lacked the previous year's financial report.

"They did not have an annual financial report, therefore they could not have a budget," said Steve Ford, a fiscal and policy analyst for the Iowa Department of Management. "Statutorily, you can't spend public funds without a budget ... so they can't collect taxes."

If the complete budget is not in to the state by June 15, nothing can be done, Ford said. And Blencoe missed that date.

"You ask most city officials: This is not an onerous process. It's just not," said Alan Kemp, executive director of the Iowa League of Cities. "It's very easy to make the timeline. So most cities don't have a problem."

Many larger communities employ accountants and administrators who make sure everything goes as it should. But smaller towns rely on city clerks.

Generally, one or two Iowa cities per year get themselves into Blencoe's predicament, officials said. In previous years, Beaconsfield, New Albin and Coin could not collect property taxes, the Omaha-World Herald reported.

The Iowa League of Cities holds budget workshops each year to help local officials and clerks through the process and sets up small-town clerks with mentors, if needed.

Ford, who specializes in city property tax issues at the Department of Management, also is available to those who need help.

In Blencoe's case, officials said the city's former part-time clerk missed the deadline and the mayor failed to follow up.

Kristie Ruffcorn, who had served as mayor since the mid-1990s, lost her re-election bid in November. From January 2008 to September 2011, the clerk's job was held by Kym Harris of nearby Onawa.

Ruffcorn said she didn't know there was a problem until the Department of Management sent her a letter June 27. It said the town would be able to collect $0 for its tax levy in fiscal 2012, which began July 1, 2011.

Council members told Ruffcorn to seek Harris' resignation.

Harris told the Omaha World-Herald last week that she couldn't recall whether anyone had tried to reach her about completing the form. She said she was going through cancer treatments and "everything was kind of in turmoil."

"It was just a clerical error," she said. "It just got missed is all."

Blencoe collected about $64,000 in property taxes during fiscal 2011. This year, without the ability to collect taxes, there are still bills to be paid. Public buildings need to be heated and snow has to be cleared off the streets.

One option being considered is taking out a loan and using future taxes to pay it off.

The city's new clerk, Deb Alexander, is taking steps to ensure there are no repeats of the problem. She is preparing an informational meeting with the City Council for later this month.