Legislative Correspondence Regarding Property Tax Rates Copyrighted
March 4, 2019
City of Dubuque Consent Items # 22.
ITEM TITLE: Legislative Correspondence Regarding PropertyTax
Rates
SUM MARY: City Manager providing a copy of a letter to State
Legislators regarding property tax rates.
SUGGESTED DISPOSITION: Suggested Disposition: Receive and File
ATTACHMENTS:
Description Type
Letter to State Legislators re Tax Rates Supporting Documentation
Dubuque City Manager's Office
THE CITY OF � City Hall
AIhA�eeNc�Cit� 50 West 13th Street
�� � '�'r�`°" '�` Dubuque,IA 52001-4845
, I I 9 I Office(563)589-4110
Fax(563)589-4149
2007•2012 TTY(563)690-6678
Masterpiece on the Mississippi 2013•2017 ctymgrCcityofdubuque.org
www.cityofdubuque.org
February 20, 2019
«CompleteOFFICIALName Address»
Dear «Title» «Last»,
State Senator Jack Whitver said in the Des Moines Register on January 24, 2019, "the math
is simple: many lowans are struggling to keep up with rising tax burdens. They are literaliy
being taxed out of their homes. This is just wrong, considering our fellow lowans worked hard
all their lives to buy a home, only to see this part of the American dream crushed by rising
property taxes."
Dubuque has the lowest property tax rate per capita of the 11 largest cities in lowa (those
with a population larger than 50,000). In fact, Dubuque's property tax rate is 47% below the
average of the 10 other cities. By the end of the current 5-year capital improvement program,
the City will be utilizing only 43% of the statutory debt limit and currently has general fund
reserves of 22% ($15.5 million), as required by Moody's Investors Service for a City with an
established bond rating like Dubuque (Aa3). Over the years, the City of Dubuque has
reorganized and implemented technology improvements and has 12 fewer full-time
employees than in 1981, even though the City now offers more services. Dubuque sets a
very high standard when it comes to fiscal responsibility.
The tax rates set by cities in lowa are impacted by many factors, such as the change in
taxable value, change in property class rollbacks, state equalization orders, state funding
level of the homestead credit, changes in other revenue streams such as local option sales
tax, hotel/motel tax, gas and electric franchise fees, and gaming revenues, and state
mandated changes such as the elimination of state shared revenues (in Fiscal Year 2003,
this cost Dubuque $1.2 million in annual revenues), city contribution to the Municipal Fire and
Police Retirement and lowa Public Employees Retirement Systems, and creation of the new
property tax class of multi-residential. If the State of lowa discontinues the backfill payment to
cities for the rollback on commercial and industrial property, that will also impact property tax
rates set by cities.
«Title» «First» «Last»
February 20, 2019
Page 2
Three actions by the State of lowa have severely impacted City revenues over the last few
years:
1) July 1, 2016: Creation of multi-residential property tax classification.
2) July 1, 2016: Sales Tax and Use Tax Exemption for manufacturing machinery and
equipment expanded to include supplies and provided new definitions for replacement
parts and supplies.
3) July 1, 2018: Change of Potable Water Sales Tax to a Water Excise Tax (-$132,000).
The following chart shows the change in local option sales tax revenues since adoption on
April 1, 1988:
:� .
. • . .
_ �
1989 $3,041,350
1990 $4,321,108 42.08%
1991 $4,254,646 -1.54%
1992 $4,514,848 6.12%
1993 $4,742,579 5.04%
1994 $4,711,524 -0.65%
1995 $5,182,287 9.99%
1996 $5,335,656 2•g6%
1997 $5,933,581 11.21%
1998 $6,889,903 16.12%
1999 $5,679,166 -17.57%
2000 $6,194,349 9•07%
2001 $6,274,763 1.30%
2002 $6,647,288 5.94%
2003 $6,323,544 -4.87%
2004 $7,139,918 12.91%
2005 $6,993,882 -2.05%
2006 $7,223,659 3.2g%
2007 $7,759,544 7•42%
2008 $7,981,176 2.86%
2009 $7,626,973 -4.44%
2010 $8,146,613 6.81%
2011 $7,891,050 -3.14%
2012 $8,034,182 1.81%
2013 $8,697,431 $•26%
2014 $8,228,149 -5.40%
2015 $8,442,044 2•60%
2016 $9,295,107 10.10%
«Title» «First» «Last»
February 20, 2019
Page 3
. • . .
.
2017 �8,890,171 -4.36%
2018 $8,642,816 -2.78%
The following chart shows the historical tax rate for the City of Dubuque since Fiscal Year
1987:
.
1987 14.5819
1988 13.95 -4.33%
1989 11.8007 -15.41%
1990 11.6891 -0.95%
1991 12.266 4.94%
1992 12.7741 4.14%
1993 12.4989 -2.15%
1994 12.6059 0.86%
1995 11.7821 -6.54%
1996 11.7821 0.00%
1997 11.3815 -3.40%
1998 11.4011 0.17%
1999 11.0734 -2.87%
2000 10.716 -3.23%
2001 11.0671 3.28%
2002 10.7608 -2.77%
2003 10.212 -5.10%
2004 10.273 0.60%
2005 10.072 -1.96%
2006 9.6991 -3.70%
2007 9.9803 2.90%
2008 10.3169 3.37%
2009 9.969 -3.37%
2010 9.8577 -1.12%
2011 10.0274 1.72%
2012 10.4511 4.22%
2013 10.7848 3.19%
2014 11.0259 2.23%
2015 11.0259 0% �
2016 11.0259 0%
2017 11.1674 1.28%
� @
«Title» «First» «Last»
February 20, 2019
Page 4
.
2018 10.8922 -2.46%
2019 10.5884 -2.79%
2020 10.4856 -0.97%
The City of Dubuque's property tax rate was impacted by the following key revenue changes
since 1987:
� • • . . . -
• -
April 1 , 1988 � 1% local option sales tax was passed by local referendum, of which 50% is
for property tax relief, 30% for street improvements, and 20% for the
upkeep of city-owned property. This new revenue stream significantly
im acted the Cit of Dubuque's ro ert tax rate in FY 1989.
January 2, 1992 Hotel/motel tax increased from 5% to 7% was passed by local referendum,
of which 50% is for property tax relief and 50% is for promotion and
encouragement of tourism and convention business in the City of Dubuque.
The increase in hotel/motel tax impacted the City of Dubuque's property tax
rate in FY 1993.
May 1994 Local referendum passed to approve casino slot operations to be
conducted as land-based operations. Numerous changes have happened
over the years, both positively and negatively impact City and State
revenues.
2003 State of lowa eliminated state shared revenue to cities after FY 2004
budget was already adopted. Loss of revenue to the City of Dubuque of
$1,195,425.
July 1, 2003- June State of lowa underfunded the Homestead Credit directly impacting the tax
30, 2013 burden of residential tax a ers.
December 1, 2003 City of Dubuque began collecting a 2% franchise fee on gas and electric
utilit bills.
June 1, 2010 City of Dubuque increased gas and electric franchise fee from 2% to 3%.
2013 Property Tax Reform passed by the State of lowa
July 1, 2014 Commercial and Industrial property classes are taxed on 95% of assessed
value instead of 100% of assessed value. State of lowa provides cities with
a backfill a ment for tax revenue loss.
January 2015 City of Dubuque increased gas and electric franchise fee from 3% to 5%.
July 1, 2015 Commercial and Industrial property classes are taxed on 90% of assessed
value instead of 100% of assessed value. State of lowa provides cities with
a backfill a ment for tax revenue loss.
;
,
;
a
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«Title» «First» «Last»
February 20, 2019
Page 5
� - . . . . -
. • - �
July 1, 2016 New property tax classification for rental properties called multi-residential
is created, which requires a rollback, or assessment limitations order, on
multi-residential property which will eventually equal the residential rollback.
Multi-residential property includes apartments with 3 or more units. Rental
properties of 2 units were already classified as residential property. The
State of lowa will not backfill property tax loss from the rollback on multi-
residential property. Rollback for multi-residential in FY17 is 86.25%.
Revenue loss to the Cit of Dubu ue of$331,239.
July 1, 2016 Sales Tax and Use Tax Exemption for manufacturing machinery and
equipment expanded to include supplies and provided new definitions for
replacement parts and supplies and negatively impacted local options sales
tax revenues.
July 1, 2017 The backfiil on the loss in property tax revenue from the rollback on
commercial and industrial property is capped by the State of lowa at the
Fiscai Year 2017 level in FY 2018 and be ond.
July 1, 2017 Multi-residential property rollback for multi-residential in FY18 decreased
from 86.25% to 82.50%. The State of lowa will not backfill property tax loss
from the rollback on multi-residential property. Revenue loss to the City of
Dubu ue of $472,127.
July 1, 2018 Multi-residential property rollback for multi-residential in FY19 decreased
from 82.50% to 78.75%. The State of lowa will not backfill property tax loss
from the rollback on multi-residential property. Revenue loss to the City of
Dubu ue of$576,503.
July 1, 2018 Change of Potable Water Sales Tax to a Water Excise Tax. Water is no
longer subject to sales tax which results in local option sales tax not applied
(-$132,000). The revenue from the Water Excise Tax will be used to fund
water ualit issues in the state.
July 1, 2018 Federal formula changed for Transit Federal Operating Assistance. Now
based on a comparison of larger cities which has resulted in a decrease of
funding (-$148,416). Previously the allocation was based population and
o ulation densit .
July 1, 2019 Multi-residential property rollback for multi-residential in FY20 will decrease
from 78.75% to 75.00%. The State of lowa will not backfill property tax loss
from the rollback on multi-residential property. Revenue loss to the City of
Dubu ue of $696,046.
The Cit of Dubuque's pro ert tax rate was impacted b the followin ke ex ense chan es:
�
� - . o . . -
.
Jul 1, 2009 MFPRSI Cit Contribution decreased from 18.75% to 17.00% -$158,130
Jul 1, 2009 IPERS Cit Contribution increased from 6.35% to 6.65% +$51,495
June 30, 2010 10.04% Increase in Self-Insured Health Cost +$588,797
Jul 1, 2010 MFPRSI Cit Contribution increased from 17.00% to 19.90% +$364,225
Jul 1, 2010 IPERS Cit Contribution increased from 6.65% to 6.95% +$60,453
� � ,
«Title» «First» «Last»
February 20, 2019
Page 6
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� • . . . . -
. -
June 30, 2011 12.73% Increase in Self-Insured Health Cost +$821,364 ,
Jul 1, 2011 ( MFPRSI Cit Contribution increased from 19.90% to 24.76% +$617,294
Jul 1, 2011 IPERS Cit Contribution increased from 6.95% to 8.07% +$81,127
June 30, 2012 3.34% Decrease in Self-Insured Health Cost -$242,933
Jul 1, 2012 MFPRSI Cit Contribution increased frorn 24.76% to 26.12% +$178,966
Jul 1, 2012 IPERS Cit Contribution increased from 8.07% to 8.67% +$94,992
June 30, 2013 18.23% Increase in Self-Insured Health Cost +$1,281,768
Jul 1, 2013 MFPRSI Cit Contribution increased frorn 26.12% to 30.12% +$587,538
Jul 1, 2013 IPERS Cit Contribution increased from 8.67% to 8.93% +$106,026
May 5, 2014 City of Dubuque approves settlement of the Franchise Fee Litigation J.
Thomas Zaber Vs. City of Dubuque which was filed in 2006 ($2.6 million). A
state law changed in 2013 to allow a city to charge a 5°/o utility franchise
fee, however this chan e was not retroactive.
June 30, 2014 3.27% Increase in Seif-Insured Heaith Cost +$271,752
Jul 1, 2014 MFPRSI Cit Contribution increased from 30.12% to 30.41% +$209,904
June 30, 2015 12.12% Increase in Self-Insured Health Cost +$1,040,369
Jul 1, 2015 MFPRSI Cit Contribution decreased from 30.41°/o to 27.77% -$304,945
June 30, 2016 -0.02% Decrease in Self-Insured Heaith Cost -$1,484
Jul 1, 2016 MFPRSI Cit Contribution decreased from 27.77% to 25.92% -$223,306
June 30, 2017 15.15% Increase in Self-Insured Health Cost +$1,458,132
Jul 1, 2017 MFPRSI Cit Contribution decreased from 25.92% to 25.68% -$23,153
June 30, 2018 19.42% Decrease in Seif-Insured Health Cost -$2,151,455
Jul 1, 2018 MFPRSI Cit Contribution increased from 25.68% to 26.02% +$228,842
July 1, 2018 IPERS Cit Contribution 8.93% to 9.44% +$78,372
Jul 1, 2019 MFPRSI Cit Contribution decreased from 26.02% to 24.41% -$165,562
The change in taxable values is also a factor in setting property tax rates each fiscal year.
The following chart shows the historical taxabie property values for the City of Dubuque:
,
,
.
1987 $909,056,634
1988 $887,555,681 -2.37%
1989 $923,376,397 4.04%
1990 $929,272,550 0.64%
1991 $937,934,744 0.93%
1992 $954,451,306 1.76%
1993 1,022,945,087 7.18%
1994 1,045,621,430 2.22%
1995 1,154,868,001 10.45%
�
3
«Title» «First» «Last»
February 20, 2019
Page 7
�
.
.
1996 1,185,319,392 2.64%
1997 1,256,434,162 6.00%
1998 1,319,319,411 5.01%
1999 1,376,065,020 4.30%
2000 1,421,417,432 3.30%
2001 1,402,309,002 -1.34%
2002 1,454,141,449 3.70%
2003 1,541,188,216 5.99%
2004 $1,572,843,167 2.05%
2005 $1,624,116,829 3.26%
2006 $1,669,454,600 2.79%
2007 $1,721,363,436 3.11%
2008 $1,762,000,629 2.36%
2009 $1,878,769,178 6.63%
2010 $1,935,742,471 3.03%
2011 $1,980,445,335 2.31%
2012 $2,034,470,780 2.73%
2013 $2,108,760,803 3.65%
2014 $2,171,073,899 2.95%
2015 $2,250,099,910 3.64%
2016 $2,255,562,993 0.24%
2017 $2,358,056,508 4.54%
2018 $2,371,609,335 0.57%
2019 $2,499,017,299 5.37%
2020 $2,542,043,245 1.72%
The following chart shows the historical state equalization orders for the City of Dubuque
which occur in odd numbered years:
� .
, . , .
1987 0% 0%
1989 0% 0%
1991 0% 0%
1993 16% 0%
1995 16% 16%
1997 17% 16%
1999 10% 14%
2001 0% 0%
� i
3
«Title» «First» «Last»
February 20, 2019
Page 8
� .
� . . .
2003 9% 18%
2005 8% 5%
2007 0% 10%
2009 0% 8%
2011 0% 0%
2013 0% 0%
2015 0% 12%
2017 0% 0%
2019 0% 8%
The following chart shows the historical City Assessor revaivations or reappraisals for the
City of Dubuque:
. � . •
. . .
� . , � � . . �
! 2006* 6.2% -3% I 0%
2009 12.03% 0% �%
2016* 0% 0.89% -6.95%
2017 0% 12% 0%
2019 7.00% 0% 0%
*Reappraisal of properties
The City of Dubuque has minimized property tax increases over the years by diversifying
revenues and by being fiscally responsible. The City of Dubuque has minimized expense
increases by being proactive and bidding costs, including the third-party administrator for the
self-insured health plan which reduced costs by 19.42% in the first year and the benefit
provider for the prescription drug plan which is estimated to reduce costs by $244,000.
However, there are many revenue and expense changes that are out of the City's controi,
which has included the end of State shared revenues in 2003, property tax reform which lead
to revenue loss for cities, increase in city contribution rates for the Municipal Fire and Police
Retirement and lowa Public Employee Retirement Systems, and the State of lowa
underfunding the Homestead Property Tax Credit from Fiscal Years 2004-2013
«Title» «�irsfi» «Lasfi»
February 20, 2019
Page 9
As you look at the lawa property fiax sysfiem, I hope that you also take into considerafiion that
cities must diversify funding in order to minimize future property tax rate increases but are
limited by what is available by Sfiafie law(local option sales tax is capped at 1%, hotel/motel
tax is capped at 7%, and ar� entertainment fiax is nofi auailable). In addition, please be aware
of fihe many past changes irnplemented by the State of lowa that have had a negative impact
on cities and counties across the sfiafie, The complexity of the property tax system will
certainly lead ta uninfiended consequences if additional property tax reform is adopfied.
Sincerely,
��I'��"�'�"t !/ �
�'�°'�'� ' �,
Michael C. Van Milligen
City Manager
MCVM:jml
cc: Mayor Buol and City Council Members
Teri Goodrnann, Assistant City Manager
� �, � �'
The Honorable Pam Jochum The Honorable Carrie Koelker The Honorable Lindsay James
Senate Chamber Senate Chamber House Chamber
lowa Capitol Building lowa Capitol Building lowa Capitol Building
Des Moines. IA 50319 Des Moines. IA 50319 Des Moines. IA 50319
The Honorable Chuck Isenhart The Honorable Andy McKean The Honorable Shannon
House Chamber House Chamber Lundgren
lowa Capitol Building lowa Capitol Building House Chamber
Des Moines. IA 50319 Des Moines. IA 50319 lowa Capital Buildina