IOWA CITY — Nearly $1 million in fiscal 2021 would go toward Iowa City’s emergency efforts to fight climate change under a new budget proposal to the City Council.
While that money would be raised by imposing a new property tax in the city, other obligations would lessen and the city would lower its overall tax levy again.
If approved by the council, the city’s overall rate would decrease from $15.83 per $1,000 of a property’s taxable assessed value this fiscal year to $15.77 next fiscal year from July 1, 2020, to June 30, 2021.
“The overall city tax rate is going to drop 6 cents,” said City Manager Geoff Fruin. “It’ll be a net reduction for the ninth year in a row.”
City staff is proposing to increase two levies in the fiscal 2021 budget.
One is a levy for city employee benefits, which would increase from $3.24 to $3.34 per $1,000 of a property’s valuation. The employee benefits levy can pay for expenses outside of salary, such as insurance and pensions.
The city also would add an “emergency” levy of 24 cents per thousand, which is 3 cents below the allowable level set by the state. The city imposes no such levy now.
The emergency tax levy would generate nearly $1 million for the city, which would be put it toward its carbon reduction efforts.
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“These will be programs like the incentive programs for property owners, additional tree plantings and public education efforts that — from year to year — can either scale up or scale down without a lot of disruption to the organization,” Fruin said.
Revenue generated by the emergency tax levy would not fund any staff positions, Fruin said, allowing future city councils to scale the levy up or down as they see fit.
The two increased levies would be offset by a 40-cent reduction in the debt service levy — from $2.98 to $2.58 per thousand — which the city uses to pay down loans.
The Iowa City Council in August declared a “climate crisis” and called for a 45 percent reduction in carbon emissions from 2010 levels by 2030 and for reaching net zero by 2050. City staff also was directed to deliver a report with recommendations to accelerate carbon emission reductions.
That report, delivered in November, includes 64 initiatives broken down by category — buildings, transportation, waste, adaptation and sustainable lifestyle — and type — education, incentives, regulations, city policy and projects.
According a special report on city property tax levies authorized by the Iowa League of Cities in 2018, 426 cities in Iowa — or 45 percent — use emergency tax levies to some extent.
Fruin said Iowa City has not used an emergency tax levy since fiscal 2010, but he said the city had used an emergency tax levy “fairly regularly” in the early 2000s to supplement operations.
Fruin guessed most cities with emergency tax levies use the funds in a similar manner.
“I’m not aware of anybody that is using it specifically for climate change efforts,” he said, noting he had not reviewed each city’s use of emergency levy funds.
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Use of an emergency levy would be a decision made from year to year. Future councils could eliminate, reduce or add to the proposed 24 cent levy. However, the emergency levy is intended for the actions laid out in the climate action report, and those are multiyear efforts, Fruin said.
“We anticipate that the emergency fund will be needed for several years to fully carry out those actions,” he said.
The proposed emergency levy does not require any permission from the state since it is within parameters set by state rules, Fruin said.
The City Council is scheduled to have work sessions on the proposed fiscal 2021 budget from 8 a.m. to 5 p.m. Saturday at City Hall and from 3 to 7 p.m. Jan. 7 at City Hall. The proposed budget is at icgov.org/budget.
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