Next stop on abatements: statehouse

CEDAR RAPIDS - The Linn County Supervisors will look to the state legislature to help cover the cost of forgiving property taxes for home and business owners affected by the flood.

The local price tag for the decision, originally estimated at $5 million, could be much higher, Supervisor Linda Langston said.

Instead of offering tax abatements based on value lost in the flood - the basis for the original estimate - supervisors voted unanimously Wednesday to offer abatements for the months owners lost the use of their home or business.

“This number could be into double digit (millions),” Langston said. “We won't know until people turn these forms back in.”

The abatement applies only to the period in which the owner couldn't use the property, and only within the taxing period from July 2008 to June 2009. The supervisors approved abatement for homeowners as well as industrial and commercial property owners, including landlords. Taxes levied on the land beneath flooded homes and businesses also will be forgiven.

Filling the resulting budget shortfall will be a challenge for the city, county and school district, and the supervisors are likely to petition the legislature or federal government.

“We haven't formally discussed it, but I think we're going to make it one of our legislative priorities,” Supervisor Ben Rogers said.

Meanwhile, state tax revenue declined for the seventh straight month in August.

“The legislature is clearly going to be constrained this year by their own financial limitations,” Langston said.

In Palo, the tax abatement will be disastrous for the municipal budget, so the supervisors voted to institute a type of installment plan there, where flood victims will get a 20 percent abatement for each of five years.

It's not clear Iowa law allows for this, so even as the supervisors go to the legislature asking for money, they'll ask for approval for the extended abatement in Palo.

“You're asking the legislature for two things,” Linn County Attorney Gary Jarvis said. “To legalize what you've done, and reimburse you for it.”

The Linn County Treasurer's Office will create the application process for abatements, and take it to the supervisors for final approval.