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Legislative Correspondence_Homestead Tax Credit~} City Manager's Office '~~~.~~ ®~~~~~~ City Hall THE CTTY OF sue' .,,.. _ _ _ 50 West 13~ Street ~ ; .gG~iy Dubuque, IA 52001-4864 ~' ~ www.cityofdubuque.org ~_ § r~~g. Masterpiece on the Mississippi zoo? January 30, 2009 Representative Name Iowa State Representative Street Address City, IA Zip Dear Representative: In an article ran on January 30, 2009 in the Des Moines Register titled "Budget would boost property taxes," it is reported that Governor Chet Culver has recommended to cut nearly $50 million from the state's reimbursements to local governments for the Homestead Property Tax Credit beginning in Fiscal Year 2010. Governor Chet Culver's proposal would only fund approximately 36.3 percent of the State Homestead Property Tax Credit. This is a dramatic reduction from the Fiscal Year 2009 funding level of 72 percent. The Homestead Property Tax Credit was established by the state legislature to reduce the amount of property tax collected. The intent of the credit was to be a form of tax relief and provide an incentive for home ownership. The State Homestead Property Tax Credit works by discounting the tax collected on the first X4,850 of a property's taxable value. This provides tax relief for homeowners. Beginning in Fiscal Year 2004, the State of Iowa did not fully fund the State Homestead Property Tax Credit resulting in homeowners paying the unfunded portion. A history of the funding of the State Homestead Property Tax Credit is as follows: Hrnestea r®erty T'ax Credit Hist®ry 2002-2003 State of Iowa Funded 100% of the Homestead Property Tax Credit 2003-2004 State of Iowa Funded 85% of the Homestead Property Tax Credit 2004-2005 ~ State of Iowa Funded 81 % of the Homestead Property Tax Credit 2005=2006 State of Iowa Funded 78% of the Homestead Property Tax Credit H®rnestead r®pr~y T°ax Credit I®list®ry (c®ntinued) 2006-2007 State of Iowa Funded 77% of the Homestead Property Tax Credit 2007-2008 ~ State of Iowa Funded 73% of the Homestead Property Tax Credit 2008-2009 ~J State of Iowa Funded 72% of the Homestead Property Tax Credit If the State Homestead Property Tax Credit is reduced to 36.3% as opposed to 100% funding, the average homeowner in the City of Dubuque would pay an additional $44.00 in property taxes to the City of Dubuque. This would be an 8.39% property tax increase to the City share of property taxes for the average homeowner. The alternative to a property tax increase to the City would be a reduction of $1.6 million to the City's budget, which would devastate the service levels provided to Dubuque citizens. The City of Dubuque is firmly against the reduction of the funding of the State Homestead Property Tax Credit. The State should fund the Homestead Property Tax Credit at 100% of the original amount established by the State legislator. A reduction of this credit would not only adversely impact the residents of Dubuque, but the entire state of Iowa in these tough economic times. Sincerely, Michael C. Van Milligan City Manager The Honorable Pat Murphy Speaker of the House Iowa State Representative 155 N. Grandview Avenue Dubuque, IA 52001 The Honorable Tom Hancock Iowa State Senator 310 E Main Street Epworth, IA, 52045 The Honorable Pam Jochum Iowa State Senator 2368 Jackson Dubuque, IA 52001 The Honorable Thomas Schueller Iowa State Representative 503 W. Platt Street Maquoketa, IA 52060 The Honorable Roger Stewart Iowa State Senator 3936 317 Avenue Preston, IA 52069 The Honorable Charles Isenhart Iowa State Representative 1611 Main Dubuque, IA 52001 The Honorable Steven Lukan Iowa State Representative 7365 Columbus Street New Vienna IA 52065 The Honorable Ray Zirkelbach Iowa State Representative 637 W. First Street Monticello, IA 52310