The City Council recently met with our local delegation (senators and representatives) to discuss our goals, priorities, and how the legislature in Des Moines can help us. We discussed various topics, some that are rumored to be at risk of losing funding and others where improved processes could greatly improve our efficiency and operations. However, one of the topics presented by Teresa Fitch, City Finance Director, caused me the greatest concern. I wanted to share my perspective in hopes that praise and blame get properly directed.
As an elected official, I open myself up to criticism and feedback. At times, it can be difficult to hear; however, I also believe that it can give us ideas for improving our community. Unfortunately, House File 718 appears to do nothing but harm our taxpayers, and limit our ability to fund essential services. The Governor signed this bill on May 4, 2023, and essentially set parameters on what local governments can tax their citizens to meet budget needs. In year’s past, if your community experienced an increase in the total value of assessed properties, the amount of tax dollars could increase by the same percentage. However, with this bill, various levies were consolidated into a newly defined, adjusted, City General Fund Levy (CGFL), which has a growth limitation based on property tax growth. If a city experiences between 3% and 6% growth in assessed value, the State will now only allow a 2% increase in the CGFL. If the assessed value grows by 6% or more, the State will only allow a 3% increase in the CGFL.
While initially lower taxes might be exciting initially, sometimes that can be to the detriment of a community. The City of Sioux City has kept their taxes as low as possible, utilizing fund balances in place of raising taxes, and decreasing taxes when possible. These funds are used for a various City services including: public safety, parks and recreation, library services, the museum, subsidizing the airport, the Convention Center, and Tyson Events Center, in addition to day-to-day operations. As costs of services continue to rise, this levy limitation may hinder the necessary funds to maintain existing services and public safety. The impact of this bill is $603,076 in lost property tax revenue for the FY 2025 budget year (2023 Assessments). If the City experiences 6% growth in assessed values, the 3% CGFL growth limit would amount to a loss of $11.4 million in property tax revenue in the next five years. If the City only experiences a 4% growth in assessed values, the 2% CGFL growth limit would amount to a loss of $10.8 million in property tax revenue in five years.
The $10.8 million to $11.4 million in lost revenue in the next five years would go a long way in funding existing services and expanding others. The City has used fund balances for years to be fiscally responsible to the taxpayers, with not having those excess fund balances. The City may have to look at cutting or modifying existing services. However, the Governor and state legislature seem to believe they would do better if that money was directed to them.
I believe that if I’m spending foolishly and increasing taxes at a rate that doesn’t make sense, the citizens of Sioux City will hold me accountable at the ballot box. I trust our local governments to manage their money. If the State doesn’t, perhaps the State Auditor could assist, but please urge your elected officials to stop bills like this that are stripping services and funds used to help our communities.
By Alex Watters
