Not long ago, I wrote an article for this publication on Senate File 619, which discussed the backfill of property taxes that would no longer be given back to cities as they had been for decades. Governor Brandstad and Governor Reynolds had previously reassured cities that this backfill of taxes was guaranteed, but after its reversal, cities are now expected to provide the same services with fewer funds. This dangerous trend of the state redirecting local taxes to its balance sheet continued in 2023 with the passage of Senate File 718, significantly changing cities’ ability to tax properties. The final version of 718 presented many changes to taxes in Iowa. While tax deductions may benefit some property owners, they also make it difficult to provide services for your community, with reductions in money coming in.
Property taxes are used to cover the cost of many public services, such as police, fire and emergency medical services, library services, and park maintenance, to name a few. The city’s portion of the total property tax paid by property owners is 43%. The rest of your tax portfolio goes to the school district and county. Sioux City officials have been mindful of the impact on property owners in the last 10+ years and have done our part to keep our tax asking low. However, during the upcoming FY 2026 budget, the City of Sioux City will be faced with one of the most challenging years in several decades. Considering the two bills referenced above, the ongoing subsidy for our local airport; House File 2552, that drastically reduced taxes collected on the first $150,000 of value for commercial and industrial property owners, and the rise in insurance expenses for employees, the Sioux City Council would need to reduce the City’s budget by $3.2 million this year in order to avoid any additional impact to property owners.
To help you understand what it looks like for our city to cut $3.2 million out of our budget, here are a few examples:
Ending the City’s Library Services = $3,288,709
Cutting 25 Police Officers = $3,200,000 ($129,000/ FTE)
Cutting 29 Fire Fighters = $3,200,000 ($110,000/ FTE)
Obviously, your City Council isn’t going to take any of these steps to reduce the safety or services we provide our residents. However, what is currently happening at the state level is not sustainable. In our legislative discussion with state officials, we asked for answers or any rationale as to why these dollars continue to be stripped out of Siouxland and cities across Iowa but heard few answers. All I ask is that when you receive your property assessment or tax notice, you remember that, unfortunately, it may not translate to more police presence, improved services, or additional street paving in our community. I hope the state changes course to make cities whole and allow them to have the local control to lead their community, but this trend is concerning, to say the least.
By Alex Watters
