IOWA CITY — City residents will have a lower property tax rate but higher water bills if the city’s proposed 2020 fiscal year budget is approved.
Under the proposed budget, the property tax levy would decrease by 35 cents to $15.83 per $1,000 assessed valuation, which would be the city’s lowest rate since fiscal year 2002.
A typical water bill would increase $26 a year, or about $2 a month.
The increase represents a 5 percent increase in water rates and a 50-cent increase in the stormwater rate.
The spike is a result of the city’s biggest water customer, Procter & Gamble, downsizing operations in its Iowa City plant. The company announced in February that it was moving its hair care and body wash lines to a West Virginia plant by late 2020. The oral care production remains in Iowa City.
“We anticipate that we’ll be losing about 8 percent of our water revenues as they transition that beauty care line to West Virginia,” City Manager Geoff Fruin said. “We obviously have to still maintain the distribution system and invest in our treatment plant.”
City staff plan to recommend raising the water rate another 5 percent in fiscal year 2021, Fruin said.
Iowa City’s new property tax rate would be the eighth year in a row Iowa City has decreased its tax rate, totaling an 11.2 percent decrease in the tax rate since fiscal year 2012. In 2012, Iowa City’s municipal tax rate of $17.84 was among the highest in the state, according to the city’s budget proposal documents.
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By comparison, Iowa City’s 2019 fiscal year rate was $16.18, the fifth highest among Iowa’s top 10 most populous cities.
The Coralville property tax rate is at $13.53 with North Liberty at $11.03 for the 2019 fiscal year. Des Moines’ tax rate is $17.04, while Cedar Rapids is at $15.22.
Iowa City was able to drop its tax rate again in the coming year, primarily because of debt restructuring and lower interest rate, said Dennis Bockenstedt, the city’s finance director.
“This year we had good property tax growth,” Bockenstedt said. “For us, because we’ve made an effort to control expenses, we’ve had rising property values — it has afforded us the ability to lower our rate ... eight years straight.”
The proposed budget calls for $166.8 million in expenditures, including $58.7 million in the general fund, which covers services, such as police, fire, parks and recreation, and general government operations. Some $13.4 million is budgeted for capital projects.
The proposed spending plan provides $2.5 million for the Johnson County Behavioral Health Urgent Care Center, a facility that will provide care for people experiencing mental health or substance abuse crisis situations. The new center will be a low-barrier shelter with sobering units.
The Iowa City Council held a work session Saturday to review the budget proposal. Any changes will be presented to the public in February. A final budget must be approved by March 15.