Legislator Ltr Lukan HF 25City Manager's Office
City Hall
50 West 13th Street
Dubuque, Iowa 52001-4864
(563) 589-4320 office
(563) 589-4149 fax
ctymgr@cityofdubuque.org
The Honorable Steven Lukan
Iowa State Representative
7365 Columbus Street
New Vienna IA 52065
Dear Steve:
February 3, 2003
I am writing to you regarding HF 25 Property Tax Limitation legislation because of your
sponsorship of this bill. This legislation limits the amounts of property tax levies cities
and counties can impose for FY 2004 and FY 2005 to FY 2003 levels. It does establish
exceptions for new valuation due to new construction or improvements, annexation, or
phasing out of tax exemptions or certain other exceptions. It allows limitations to be
exceeded, if approved by the state appeal board, for certain natural disasters or
compelling needs.
I believe one apparent Problem with the legislation being proposed is one that all cities,
and the state, are currently facing and that is escalating health insurance costs. The
City of Dubuque is facing a 35% increase in health costs for FY 2004. Dubuque, along
with other cities, is also facing a significant increase in Fire and Police Retirement rates
which are going from 17% to 20.48%. General Liability and property insurances are
increasing at a rate of around 15%. At the same time, state revenues to cities have
been declining. There simply are no guarantees that costs will not increase more than
the growth in valuations due to new construction. Those best empowered to make
those choices for each city are the local government officials who are elected by the
public to make funding decisions. They have the current information regarding their
cities unique funding problems and can inform their constituents, receive input and
make their decisions based on the impact for their particular community.
The impact of rollback factors on valuations further complicates this proposal and
analyzing the true impact it would have on local government services.
Please join us in opposing the proposed HF 25 legislation.
Another bill being proposed which could affect cities is H JR I that proposes two
amendments to the Constitution of the State of Iowa. The "State Taxpayer Rights
Amendment." Language in this bill requires the State of Iowa to have a three-fifths
The Honorable Steven Lukan
February 3, 2003
Page 2
majority vote to increase taxes or implement new taxes. We have been advised that
Bob Kurtter, a Vice President with the division of Moody's Investor Services handling
bond ratings for state and major cities, informed the League that this type of
constitutional amendment has been detrimental to bond ratings. A lower bond rating
means higher risk and thus higher costs to the governmental entity. The health of the
state's economy also affects Iowa cities bond ratings.
The Governor and legislative leaders are advocating a review and changes to our state
and local tax structures over the next several years. Now is not the time for Iowa to
consider a limitation proposal that may or may not be consistent With tax changes that
will be forthcoming from the tax structure studies.
Sincerely,
Michael C. Van Milligen
City Manager
MCVM:jh
cc: Senator Mike Connolly
Senator Julie Hosch
Senator Roger Stewart
Representative Pam Jochum
Representative Pat Murphy
Representative Robert Osterhaus
Representative Gene Manternach
Mayor Terry Duggan
Dubuque City Council
Susan Judkins, Director of Governmental Affairs, Iowa League of Cities
Barry Lindahl, Corporation Council
¢ Cindy Steinhauser, Assistant City Manager
Bill Baum, Economic Development Director