Proposed Levy LegislationJanuary 25, 2000
FIELD(title)
FIELD(name)
FIELD(address]
FIELD(city, state, zip)
Dear FIELD(salutation):
I am writing to express my concerns regarding proposed legislation that consolidates all
non-voted levies for cities into one levy, subject to inflationary annual adjustments of total
revenue.
The draft legislation that I have reviewed considers only the revenue side of the equation
without the expenditure side. The proposal combines all non-voted levies into one and
uses the implicit price deflator as the measurement for inflation. This measurement is the
lowest inflationary measure available, lower than the consumer price index. It is also a
national measure, not based on the cost of goods and services for individual cities in Iowa.
The legislation as proposed would cause problems for the City of Dubuque in several areas.
The proposed formula assumes a city's current scope of services will remain the same
unless a referendum is held to support an increase. That means that service level increases
and/or new services that the City Council may want to add, or that are dictated by federal
or state legislation and/or regulations, will be subject to a referendum. In some cases, the
cost of the referendum may exceed the cost of the service they wish to add or improve.
For example, I have recommended a program be added to the budget that would reduce
sanitary sewer special assessments for low and moderate income persons based on a HUD
income scale. Although it is anticipated that this will not be a major expense item, the cost
of a referendum if required would be $10,000.
Remember that the tax supported revenue stream would be subject to limited growth.
Within that growth, each city must provide for negotiated and/or arbitrated wage
settlements, health, liability and property insurance increases, state and federal mandates.
and the impact of inflation on costs such as landfills, electricity, gas and fuel. Cities who
are already faced with levy limitations and have been living within those limitations through
a combination of user fees, local option taxes, and productivity and efficiency measures,
are now going to have to tighten their belts even further as the levy limitation is expanded
through a consolidation of funds that used to be unrestricted (e.g., Trust and Agency and
Tort Liability). Making these required expenses compete for limited property tax funds
directs resources away from other community priorities.
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Proposed Legislation
Page 2
If the restrictions are applied to the debt service levy for non-voted debt, it penalizes cities
that have been utilizing other revenue sources rather than G.O. debt for essential corporate
purposes. This may be fine in good times, however, the revenue sources that the City of
Dubuque has used to reduce our outstanding debt (gaming revenues and sales tax) are the
first ones to be impacted by recession. The proposed legislation would just add additional
misery to cities who are faced with economic hard times in the future.
The City of Dubuque has prided itself on having one of the lowest tax rates of the larger
cities in Iowa. Over the past six years property taxes have not increased in any of those
years for the average homeowner, and in fact have decreased for four of the six years.
However, material prepared by the Legislative Fiscal Bureau used Dubuque in their
examples for determining the impact of the proposed legislation. That example showed
that if the legislation had been in effect for Fiscal Year 2000. the City of Dubuque would
need to reduce its tax askings by $695,772 (attached). This is for a year when the
average homeowner's taxes were reduced by .17%, the average commercial property
owners by -.6% and industrial property by -3.2%. As you can see, there are problems with
the complicated formula that is being proposed.
One of the major problems that I believe the legislature was concerned about and wanted
to address was the tax burden shift that occurs each year between classes of property,
which is not addressed at all in the proposed legislation.
I appreciate your consideration of the problems that may arise as a result of the proposed
legislation and extend an invitation for you or your staff to contact me or Administrative
Services Manager Pauline Joyce with any questions you might have.
Sincerely,
Michael C. Van Milligen
City Manager
cc
Mayor Terry Duggan
City Council Members
Barry Lindahl, Corporation Counsel
Tim Moerman, Assistant City Manager
Pauline Joyce, Administrative Services Manager
The Honorable Paul Scherrman
House Chamber
State Capitol Building
.es Moines. IA 50319
The Honorable Pat Murphy
House Chamber
State Capitol Building
Des Moines, IA 50319
The Honorable Pam Jochum
House Chamber
State Capitol Building
Des Moines. IA 50319
The Honorable Robert Osterhaus
House Chamber
State Capitol Building
Des Moines, IA 50319
The Honorable Mike Connolly
Senate Chamber
State Capitol Building
Des Moines, IA 50319
The Honorable Tom Flynn
Senate Chamber
State Capitol Building
Des Moines. IA 50319
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Dubuque
Levy Limitation Slmulaüon
Base y""" Levy A1J1horily
x Pet. Inc. Prica Deflator
" New Y.a, &se Le\'}' Authority
New y.., Valuation
. Net New ConstNdlon a AI1l,exatton
= Net V.luation
New Year aas.. Le\'}' Authority
I Net VeluaUon
" ease La\'}' Rate
Net New ConstnJction a Annexation
. ease Levy fèlte S
. Veluatio(1 G",- Umilatlon
. Now Yea, Base A1J1hority
= Currtnl Le\'}' Umi ¡ 1ion
. Prict Yea~s Unused Au<hority
= Total Umilation
To"" UmitaUon Pet. Chonçc
Adual Le\'}'
AcumJ Levy Pet Chonge
Unused Authority
$14,000.000
.
$12.0c0.OOO
. 556
$10.OCO.000
1;' $ð.OCO,ooo
~ $s.ooo.OOO
~ $4,000.000
52,000,000
$-
FY 1998
FY 1998 FY 1999 . FY 2000
11.002.041 $ 11,419.55õ $ 11.909,001
2.20% 1.40% 2.00%
11,2'4,088 11,579,430 12.147.161
1.319.319.411 1.37õ,OðS,020 1,421,417,432
20,272,314 38,061,365 le,IH.93~
1,299,047.097 1,337.983,8SS 1,405.242.487
11,244,086 11,579.430 12,147.181
1.299,047,097 1,337,883,I!55 1.4OS.242.497
8.1!556 $ 8.6544 $ 6.8442
20,272,314
6.655õ $
175.470
11.244,065
1I,419.~5ô
o
11,419,555
38.OðI.36~
6.8544 $
329,~71
11,579,4S0
11.909,001
11.509.001
4.3%
16,174,935
8.6442
139,819
12.147,181
12.287.000
12.287,000
3.2%
I I ,955,609
(SJ7,O~3) S
12.478.378 12,982.772
4.4% 4.0%
(569,377) $ (695,772)
S6.6580
S8.6560
$8.6540
$ð.6520
$6.6500 B
~
$8.6480 ~
58.6460 j
$ð.6440
$(2.000,000)
I_Tobl Umibtlon c::::::JAotual Le\'}' t5!:JUnusad Ac~ority ""*'"Baselavy Rat.!
.
Dubuquo Sim