Letter to State Legislators Regarding Legislative Property Tax Issues Copyrighted
February 18, 2019
City of Dubuque Consent Items # 21.
ITEM TITLE: Letter to State Legislators Regarding Legislative Property
Taxlssues
SUMMARY: City Manager providing a copy of a letter to State
Legislators regarding legislative property tax issues.
SUGGESTED DISPOSITION: Suggested Disposition: Receive and File
ATTACHMENTS:
Description Type
Letter to Legislators re Legislative Property Tax Issues Supporting Documentation
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February 14, 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 literally
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%. 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, 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 14, 2019
Page 2
The following chart shows the historical tax rate for the City of Dubuque since Fiscal Year
1987:
. .
1987 14.5819 2004 10.273 0.60%
1988 13.95 -4.33% 2005 10.072 -1.96%
1989 11.8007 -15.41% 2006 9.6991 -3.70%
1990 11.6891 -0.95% 2007 9.9803 2.90%
1991 12.266 4.94% 2008 10.3169 3.37%
1992 12.7741 4.14% 2009 9.969 -3.37%
1993 12.4989 -2.15% 2010 9.8577 -1.12%
1994 12.6059 0.86% 2011 10.0274 1.72%
1995 11.7821 -6.54% 2012 10.4511 4.22%
1996 11.7821 0.00% 2013 10.7848 3.19%
1997 11.3815 -3.40% 2014 11.0259 2.23%
1998 11.4011 0.17% 2015 11.0259 0%
1999 11.0734 -2.87% 2016 11.0259 0%
2000 10.716 -3.23% 2017 11.1674 1.28%
2001 11.0671 3.28% 2018 10.8922 -2.46%
2002 10.7608 -2.77% 2019 10.5884 -2.79%
2003 10.212 -5.10% 2020 10.4856 -0.97%
The Cit of Dubu ue's ro ert tax rate was im acted b the followin ke revenue chan es:
P - • • . . -
. • - �
1984 Construction of cit -owned Dubu ue Gre hound Park Casino.
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°/o for the
upkeep of city-owned property. This new revenue stream significantly
im acted the Cit of Dubu ue'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 on land.
November 1995 City-owned Dubuque Greyhound Park renovated facilities and opened a
casino slot gambling operation. The additional gaming revenue decreased
ro ert taxes in FY 1995.
«Title» «First» «Last»
February 14, 2019
Page 3
� - . . . . -
. . - "
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°/o franchise fee on gas and electric
utilit bills.
April 1, 2004 New lease with Dubuque Racing Association for Dubuque Greyhound Park
and Casino. Increased lease payment from 0.50% of coin-in to 1% of coin-
in and 1% of unad�usted table dro .
August 1, 2005 Dubuque Greyhound Park and Casino expanded from 600 slots to 1,000
slots.
March 2006 City-Owned Casino added table games.
December 1, 2008 Diamond Jo Casino expanded to a land-based barge casino facility and
increased to 1,100 slots. The expansion decreased the city-owned casino's
amin market and coin-in 'ust over 21%.
July 13, 2009 The State of Illinois passed a Video Gaming Act that legalized the use of
Video Gaming Terminals in liquor licensed establishments including bars,
restaurants, truck stops and certain fraternal and veterans' organizations.
The use of video gaming terminals has grown to $9.4 million monthly for the
five counties closest to Dubuque and in a direct line with Rockford, IL,
which has limited revenue to the gaming market in Dubuque. The Q Casino
and Diamond Jo Casino average monthly revenue is $10.8 million. The
number VGT machines have increase by 84% since 2013. The five
counties in Illinois had 1037 machines in 2013 and currently have 1906
machines. Currently, Q Casino has 833 Slot Machines and Diamond Jo
has 916 for a total of 1,749 or 9% less. This is a similar impact of building
a roximatel two more casinos halfwa between Dubu ue and Rockford.
June 1, 2010 City of Dubuque increased gas and electric franchise fee from 2% to 3%.
June 7, 2010 Lease with Dubuque Racing Association for City-Owned Casino
renegotiated. Increased lease payment from 1% unadjusted table drop to
4.8% of table ames ad'usted ross recei ts.
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.
«Title» «First» «Last»
February 14, 2019
Page 4
� - • • • . -
•
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, 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 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 Dubu ue's ro ert tax rate was im acted b the followin ke ex ense chan es:
. -
� - • . • . -
. • - �
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
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 from 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 from 26.12% to 30.12% +$587,538
Jul 1 , 2013 IPERS Cit Contribution increased from 8.67% to 8.93% +$106,026)
«Title» «FirSt» «Last»
February 14, 2019
Page 5
. -
� - • • • . -
.
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 Self-Insured Health 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% to 27.77% -$304,945
June 30, 2016 -0.02% Decrease in Self-Insured Health 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°/o to 25.68% -$23,153
June 30, 2018 19.42% Decrease in Self-Insured Health Cost -$2,151,455
Jul 1, 2018 MFPRSI Cit Contribution increased from 25.68% to 26.02% +$228,842
Jul 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 taxable property values for the City of Dubuque:
. - . -
� �
. .
1987 $909,056,634 2004 $1,572,843,167 2.05%
1988 $887,555,681 -2.37% 2005 $1,624,116,829 3.26%
1989 $923,376,397 4.04% 2006 $1,669,454,600 2.79%
1990 $929,272,550 0.64% 2007 $1,721,363,436 3.11%
1991 $937,934,744 0.93% 2008 $1,762,000,629 2.36%
1992 $954,451,306 1.76% 2009 $1,878,769,178 6.63%
1993 1,022,945,087 7.18% 2010 $1,935,742,471 3.03%
1994 1,045,621,430 2.22% 2011 $1,980,445,335 2.31%
1995 1,154,868,001 10.45% 2012 $2,034,470,780 2.73%
1996 1,185,319,392 2.64% 2013 $2,108,760,803 3.65%
1997 1,256,434,162 6.00% 2014 $2,171,073,899 2.95%
1998 1,319,319,411 5.01% 2015 $2,250,099,910 3.64%
1999 1,376,065,020 4.30% 2016 $2,255,562,993 0.24%
2000 1,421,417,432 3.30% 2017 $2,358,056,508 4.54%
2001 1,402,309,002 -1.34% 2018 $2,371,609,335 0.57%
2002 1,454,141,449 3.70% 2019 $2,499,017,299 5.37%
2003 1,541,188,216 5.99% 2020 $2,542,043,245 1.72%
«Title» «First» «Last»
February 14, 2019
Page 6
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%
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 revaluations or reappraisals for the
City of Dubuque:
� • . .
. . .
. . � . � � . . �
2006* 6.2% -3% 0%
2009 12.03% 0% �%
2016* 0% 0.89% -6.95%
2017 0% 12% 0%
2019 7.00% 0% 0%
*Reappraisal of properties
«Title» «First» «Last»
February 14, 2019
Page 7
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 control,
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
As you look at the lowa property tax system, I hope that you also take into consideration that
cities must diversify funding in order to minimize future property tax rate increases but are
limited by what is available by State law (local option sales tax is capped at 1%, hotel/motel �
tax is capped at 7%, and an entertainment tax is not available). In addition, please be aware
of the many past changes implemented by the State of lowa that have had a negative impact
on cities and counties across the state.
Sincerely,
,�JL�""�"� �w'at
Michael C. Van Milligen
City Manager
MCVM:jml
cc: Mayor Buol and City Council Members
Teri Goodmann, Assistant City Manager
The Honorable Pam Jochum The Honorable Carrie Koelker
lowa State Senator lowa State Senator
2368 Jackson 807 Third Street NW
Dubuque, IA 52001 Dyersville, IA 52040
The Honorable Lindsay James The Honorable Chuck Isenhart
lowa State Representative lowa State Representative
P.O. Box 3086 P.O. Box 3353
Dubuque, IA 52004 Dubuque, IA 52004-3353
The Honorable Andy McKean The Honorable Shannon Lundgren
lowa State Representative lowa State Representative
509 South Oak Street P.O. Box 186
Anamosa, IA 52205 Peosta, IA 52068