Legislators No Support LetterFebruary 22, 2000
FIELD(title)
FIELD(name)
FIELD(address)
FIELD(city, state, zip)
Dear FIELD/salutation):
Although the City of Dubuque does not support new mandates regarding City's
taxing authority, the Senate Study Bill 3128 presents fewer problems than the
original "draft" tax limitation legislation that we reviewed.
We would however like to point out at least one major area of concern in the
proposed legislation. This legislation makes a negative adjustment to cities taxing
authority based on the differential or growth in General city balances between FY
1997 and FY 2000. The problem this presents the City of Dubuque is that we
receive 50% of the annual profits from the Dubuque Racing Association gaming
operations in January of each year. The City Council through their budget
deliberations in February and early March determine how these funds will be used in
the capital improvement budget for the coming July 1. In other words, the funds
are in our fund balance at fiscal year end but are committed to projects in the next
fiscal year or the upcoming construction season. This is consistent with the fiscal
guidelines adopted by City Council each year which requires programming these
funds through the annual capital improvement budgeting process after the actual
amounts are received.
The City of Dubuque has had this fiscal policy since gaming began. When Moody's
bond rating agency reviewed our financial condition for our bond rating, they
wanted to make sure that uncertain revenue streams were not being used in the
operating budget. Our fiscal policy regarding gaming revenues was considered a
sound approach since the City and definitely Moody's considered this funding
source as uncertain and subject to considerable fluctuation due to economic times
and the competitive environment of the gaming industry.
Because this is our fiscal policy, the balance on June 30, 1998 for the General
Fund contained $2,430,000 of Dubuque Racing Association (DRA) distribution
programmed for FY 1999 capital projects. The fund balance for June 30, 2000 will
contain $4,396,000 of D.R.A. distribution programmed for FY 2001 capital
improvements. The calculation proposed in the tax limitation legislation would
deduct the difference between these divided by 3 which results in a reduction of
our taxing authority by $655,333 for FY 2002. Even though these funds are
committed to support the capital budget and not the operating budget, the cities
operating budget resources or taxing authority would be reduced $655,333 per the
proposed legislation.
Many cities may accumulate land sales revenue or other uncertain or non-recurring
revenues in their General Fund for support of upcoming capital improvements. To
deny them this ability or penalize them by reducing their taxing authority will have a
significant impact on future capital improvements. It will discourage and may even
prevent some cities from doing pay-as-you-go financing of capital improvements
through non-recurring revenue sources.
I strongly recommend that the section of the bill referring to year end fund balances
and making this a part of the proposed tax limitation calculation be deleted from
any future tax legislation.
Sincerely,
Michael C. Van Milligen
City Manager
cc
Mayor Terry Duggan
Dubuque City Council Members
Barry Lindahl, Corporation Counsel
Tim Moerman, Assistant City Manager
Pauline Joyce, Administrative Services Manager
MCVM/pj
The Honorable Paul Scherrman
House Chamber
State Capitol Building
Des Moines, IA 50319
The Honorable Pam Jochum
House Chamber
State Capitol Building
Des Moines. IA 50319
The Honorable Pat Murphy
House Chamber
State Capitol Building
Des Moines, IA 50319
The Honorable Robert Osterhaus
House Chamber
State Capitol Building
Des Moines. fA 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