Loading...
Legislative Issues - State THE CITY OF ~ DUB E ~ck~ MEMORANDUM November 13, 2006 TO: The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager SUBJECT: City of Dubuque State Legislative Issues Assistant City Manager Cindy Steinhauser is recommending the adoption of the City of Dubuque State Legislative Issues for the 2007 Legislative Session. I concur with the recommendation and respectfully request Mayor and City Council approval. \"\ j, I I U)\,<u"-" l/lv1\ Michael C. Van Milligen :, /, I L.-l \j.A:~ (/ (J/~) MCVM/cs Attachment cc: Barry Lindahl, Corporation Counsel Cindy Steinhauser, Assistant City Manager ,', City Of Dubuque State Legislative Issues For The 2007 Session State Budaet In response to a revenue shortfall during the 2003 and 2004 session the State of Iowa implemented across-the-board cuts in expenses. Some of these cuts reduced revenues to cities, with no relief to cities for state-mandated programs. Concerns remain over the impact of the reduced revenue to cities and that similar action will be taken in the 2007 session. Reduced state revenues negatively impact property taxes. Requested Action: The state should restore revenues to cities that were cut in 2003 and 2004 in an effort to make cities whole and to help reduce the burden on property tax payers. State Mandates Cities are often faced with implementing mandates from the state and federal governments without receiving the necessary funds for implementation Requested action: Enact legislation that exempts local government from providing any new service or engaging in any new activities mandated by the state if the state does not provide full funding. Property Tax The current tax structure for state and local governments is a mix of tax laws, rates and policies that do not provide for a fair and consistent tax system. The Iowa League of Cities and the Iowa State Association of Counties (ISAC) have identified key areas needing revision for a comprehensive tax reform in Iowa. They include: Changes to assessment and valuation procedure, city and county budgeting processes, developing an alternative to current property tax limitations, elimination of the rollback formula and homestead exemption. Requested action: Work with the Iowa League of Cities and ISAC to approve legislation to design a tax structure that provides tax equity and policies that are consistent with an overall direction for state and local government taxation. Homestead Tax Credit Each year the City of Dubuque tries to minimiZe the tax asking for the average homeowner by not increasing and in some years, decreasing the City's property tax rate. The State of Iowa has created a partially unfunded mandate through the establishment of the Homestead Tax Credit. The cost for the lack of full funding of this credit is passed onto taxpayers and diminishes the City of Dubuque's efforts to keep property tax rates low. The credit was funded by the State at 85% in 2003-2004, 81% in 2004-2005 and 78% in 2005-2006. Requested action: Reinstate full funding for the Homestead Tax Credit. 1 State Historic Tax Credits The Iowa Historic Preservation Tax Credit was passed in May 2000 to promote investment in our historic resources in communities, codified in Section 404A.4. Rehabilitation of these resources contributes to the economic viability as well as the strength of our communities. The secondary impacts of this historic tax credit on our communities are countless. The program provides a tax credit of 25% of the qualified rehabilitation expenses for qualified projects. Thus. each credit represents an investment in our communitv of at ieast four times the amount of the credit. Additional revenues are generated through increased property taxes, income taxes, and sales taxes. The cap for the program is currently set at $2.4 million per year, with projects waiting in line for tax credits to become available in future years. Over the last few years, the historic preservation tax credits have been reserved out to 2016, representing over $140 million in investment in Iowa's resources and communities. Dubuque has benefited from six state historic tax credit projects, which have added far more to our financial system than a simple single storefront project as listed above. The Cooper Wagon Works Building/Bricktown, the Town Clock Building of Cottingham & Butler Insurance, the Iowa Inn (Henry Stout House) senior housing project, the Heartland Financial Operations Center, the Platinum Services building, and the Red House Gallery have added over 211 permanent jobs to our economy, not including the construction jobs to complete the large projects, and perhaps as important is the multiple smaller projects that have been initiated as a direct result of these buildings revitalizations. Requested Action: Increase the cap on the historic preservation tax incentives to $20 million per year and dedicate 10% of the pool for only small projects (under $200,000 in investment). Tax Increment Financina (TIF) The Iowa Code provide that cities can use TIF for certain public and private economic development purposes once an urban renewal plan is approved and an urban renewal district established. The ability to use TIF to assist private economic development projects in urban renewal districts has become a very useful financing and incentive for private investment. Requested Action: Support efforts to maintain Tax Increment Financing as an economic development financing tool. Sales Tax Refund for Downtowns The Iowa General Assembly enacted legislation this year that provided 100% state sales tax abatement to the new racetrack in Newton. The downtowns in cities across the state, both large and small, are desperately in need of redevelopment. The state sales tax abatement could be structured as the Newton project, with 100% for ten years or some graduated rate over 10 years or less. The graduated option would be similar to Iowa Code 427B.1, which allows for partial property tax exemption for industrial real estate. The increase in property tax to schools and the additional income taxes from jobs in these retail establishments would more than offset the state sales tax losses from 2 projects that may have occurred anyway. The added vitality in small towns across Iowa would make Iowa a more attractive place to live, work and locate a business. Requested Action: Support efforts to establish a state sales tax abatement for downtown redevelopment. Fundina of Major Transportation Proiects The State of Iowa has used a strategy of allocating funds for completing the major transportation projects in the state as opposed to using a piecemeal approach. This strategy has been successful with extensive work being completed on major corridors. The same strategy should be used for major projects in larger cities, which require significant funding commitments for completing the projects in a reasonable amount of time. Examples include the IA 32 (Southwest Arterial) and the Julien Dubuque Bridge. Requested Action: Support efforts to continue the strategy for funding major transportation projects throughout the State including projects that have federal earmarks. IA32 The Dubuque City Council, the Dubuque County Board of Supervisors, and Dubuque Metropolitan Planning Organization (DMATS) has identified the completion of the Iowa Highway 32 (Southwest Arterial) project as the NO.1 surface transportation priority in the Dubuque area. The proposed Iowa Highway 32 project will be a 6.1-mile four-lane divided freeway with priority 1-access control as an alternative route for traffic through southwestern Dubuque and will connect the new Dubuque Technology Park on U.S. Hwy 61/151 with the new Dubuque Industrial Center West, and the existing Dubuque Industrial Center near U.S. Hwy 20. The highway then extends north to John Deere Dubuque Works. Preliminary project cost estimates, which includes engineering design, the acquisition of all right-of-way required for the ultimate build-out of the full four-lane project, resource mitigation and the construction of the interim two-lane highway is $71,000,000. The Metropolitan Planning Organization, DMATS, has committed $10 million in Surface Transportation Program funds for the facility. The City is also seeking financial assistance through the State of Iowa Department of Transportation Revitalize Iowa's Sound Economy (RISE) program. In February 2003, Senator Tom Harkin announced federal budget approval of $1,900,000 to complete the preliminary engineering design phase. The City has agreed to manage the next phase of the project, and in January of 2005 the City and the Iowa DOT executed the Consultant Professional Services Agreement for Earth Tech, Inc. to complete Preliminary Engineering Design Services for the Improvement of Iowa Highway 32 (Southwest Arterial). The preliminary design phase is anticipated to be complete in the spring of 2007. In February of 2005, the City received the issuance of Environmental Concurrence and the Finding of No Significant Impact (FONSI) from the various regulatory agencies and has completed the Environmental Assessment phase of the project. Due to Project funding constraints, it was decided that the Project would need to be developed in three (3) stages. The initial stage (Phase I) would include the preliminary design and development of plans for the four-lane freeway, establish the full build-out 3 right-of-way corridor boundary and develop preliminary plans for an interim two-lane highway. Phase I will provide a current cost opinion for all right-of-way acquisitions required and both the four-lane and two-lane facilities. The Iowa Department of Transportation has not included funding for the Iowa Highway 32 (Southwest Arterial) project in their Five-Year Transportation Plan, but has committed to facilitating the completion of this project. An important timely issue is matching funds to allow access to the $36.18 million in Federal funds. This project continues to be a top priority. Requested Action: The City requests any assistance that can be provided to help convince the Iowa Department of Transportation Commission to commit funding toward this vital project. Border Communities Incentive ProQram In the 2006 Iowa legislative session, House File number 2731 was approved to create the Targeted Jobs Withholding Tax Credit Program. The Department of Economic Development oversees this program. The Targeted Jobs Withholding Tax Credit Program is a program for cities located adjacent to neighboring states to remain competitive in attracting new jobs. Receiving project city status for this program will make incentives available in the amount of up to 3 percent of the wages paid by the company on new eligible jobs. The program will only be available to four cities which have been chosen as pilot project cities. This program should be expanded to more communities that fit the qualifying characteristics. This program would help to keep Iowa's communities that border other states more competitive when attracting new business to the state. Requested Action: Support efforts to expand this program to allow more communities that fit the qualifying characteristics to be eligible to receive the incentive. This program would help to keep Iowa's communities that border other states more competitive when attracting new business to the state. Economic Development The role of city government in economic development is crucial. Economic activity requires roads, streets, airports, water and sanitation. New jobs necessitate more and better housing. Growing businesses seek quality of life amenities for employees and families, such as parks, recreation and libraries. Protection and safety of property and life must be assured. This can only be accomplished with the strong support of an effective city government. Successful quality of life programs need continued funding, such as Vision Iowa, REAP, CAT funds, Iowa Great Places, the Iowa Main Street program, and tax credits for historic preservation. Requested Action: Protect and enhance economic development tools enabling cities in Iowa to promote economic improvement throughout the state. Eminent Domain During the last Session, the Legislature approved changes to the Eminent Domain language. Included in the changes, and of particular concern, is the requirement in that 4 "75% or more of the area included in the plan" is slum or blighted. We believe that a 51 % threshold is more reasonable. Furthermore the new language proposes that acquisition may only include contiguous parcels necessary for completion of a specific project. This language would be limiting for downtown development projects that may be larger in scope than just the parcels that meet the definition of slum and blight. Lastly, the burden for the use of eminent domain for airport project is increased by the requirement that the Board of Supervisors must hold a public hearing and pass a resolution unless the airport improvement is FAA-required. This creates additional layers of burden on a municipality. Requested Action: Support efforts to amend sections of the Eminent Domain law to allow for changes as proposed by the Iowa League of Cities and noted above. Fullv Fundina Enrich Iowa Proaram Enrich Iowa is a state aid program for Iowa's libraries. Until recently, Iowa was one of 8 states without direct state aid to libraries. Current state funding is at $1 million statewide versus the recommended $3 million for full funding. If Enrich Iowa were fully funded, the Carnegie-Stout Public Library could realize at least $100,000 a year in state aid. Requested Action: Support efforts to fully fund the Enrich Iowa program at $3 million statewide. Franchise Fee The Iowa Supreme Court in Kragnes vs. City of Des Moines held that a franchise fee cannot be based upon a percentage of gross revenue that exceeds the cost of regulating the utility. Public rights of way are a valuable public asset and utilities should be required to pay for the use of the rights of way over and above the cost associated with regulating the utility. Many cities have negotiated franchise fees with utilities based upon a percentage of gross revenue for use of the right of way. Requested action: Support efforts to allow franchise fees to be based upon gross revenue. Municioal Communication Utilities Communities across the state are considering creating municipal communication utilities to provide a vehicle for companies to offer state-of-the-art services to citizens and business. The option to form a municipal communications utility has been a critical negotiation tool for cities to use when trying to negotiate more affordable cable and internet service for citizens. Requested action: Resist efforts of telephone, cable T.V. and other telecommunication companies to pass a state law to inhibit the creation of municipal communication utilities. Telecommunications Cities maintain and provide data on the location of public utilities, however, no information is available from telecommunication companies on the location of fiber optic and other telecommunication lines. This information is critical for negotiating development agreements for businesses desiring to expand or locate in a community. Requested action: Pass legislation requiring that all video, telecommunications and Internet providers provide a map of their infrastructure to each municipality they serve. 5 Enterprise Zone Incentives The Enterprise Zone legislation was written to promote private investment in economically distressed areas of a city or county. To assist new employees of companies locating in enterprise zones, the legislation provides for employers to establish a capital fund for down payments or rental subsidies. The business funds this program through a credit from state withholding taxes, based on the wages paid to the participating employees. An amount equal to 1.5 percent of the gross wages paid by the employer is credited from the payment otherwise withheld, and used to capitalize this fund. This feature of the legislation has not been utilized to date. One reason is that the credit produces so little capital for the housing assistance program. For an employee earning $10 per hour, the credit equals approximately $300. Typically, down payment assistance programs offer $3,000 to $5,000; rental subsidy programs average $2,500 to $3,000 annually. In order to make this program effective, the credit for withholding should be increased. Another option is to allow the credit to be "pooled," to be made available to all eligible employees. As the legislation currently is written, the 1.5 percent credit is made available on the basis of withholding from individual employees - for the benefit of only that employee. If the credit could be aggregated, a larger capital fund could be established, from which all employee purchasing or renting housing in the enterprise zone could access funds for their housing needs. Another reason for lack of employer participation in this program is that the legislation requires the employer to choose between use of the tax credit for job training or for providing a housing assistance program. Employers to date have chosen to use the credit to pay for training new employees. Requested action: The legislation should be amended to provide the credit for both job training and employee housing assistance and to "pool" the funds. This will increase the tax credit and increase interest in the program by employers. Rescind House File 324 ReportinQ reQuirements In the 2001 General Assembly House File 324 (HF 324) was enacted. This law set up numerous new requirements for cities concerning bidding for street, bridge and culvert projects involving construction, reconstruction and improvements costing over $25,000 ($50,000 for cities over 50,000 in population). One requirement was a new report that is labor intensive and taxing to city public works departments. In addition to the report that cities currently submit on street receipts and expenditures using road use tax funds, the new report requires cities to provide detailed cost accounting for all projects within 90 percent of the bid threshold. The report also includes a statement of the cost of purchasing, leasing, or renting construction or maintenance equipment. Since the reports are extremely detailed and some cities do hundreds of street projects annually, this new requirement will entail a city needing additional resources. HF 324 did not charge the Iowa Department of Transportation to use this new report for any specific state purpose, resulting in 950 cities expending resources that could 6 be used elsewhere. This becomes particularly onerous for small cities that publicly bid the majority of street projects. Requested Action: Support effort to reduce the reporting requirements for HF 324. Hotel and Food Establishment license fees in the 2006 legislative session, House Study Bill (HSB) 648 was introduced. This bill increases the hotel and food establishment license fees which will bring them in line with costs of running the program. The Bill also includes a Plan Review fee based on establishment risk and square footage, along with a reinspection fee for critical violations found. In FY 06, the projected cost for conducting the Food inspection Activity is $77,612, while our projected revenue is $69,000. Requested Action: Support proposed legislation included in HSB 648 that will fully fund State mandated health inspections for Hotel and Food Establishments through increased license fees. School Food ProQram Inspections An additional food inspection legislative issue is based on legislation that became effective July 2005. An amendment to Section 9(h) of the Richard B. Russell National School Lunch Act (42 U.S.C. 1758(f)(5)) went into effect. This amendment imposes an unfunded mandate requiring at least two school food program inspections per year instead of one. Currently, the City of Dubuque Health Services Department inspects school food lunch programs one time per year, but does not receive any license or inspection fees for the service. It is not necessary to inspect the school food lunch programs more than once per year and this additional requirement would put an additional workload burden on staff. Requested Action: Oppose legislation to add a second School Food Program inspection. 411 Contributions The City of Dubuque's contribution to the retirement system for police officers and firefighters went from 17% of wages in fiscal year 2003 to 25.48% of wages in fiscal year 2008. The contribution rate for police officers and firefighters has remained unchanged since Fiscal Year 1997. Their contribution is 9.35% of wages. Requested action: Any future increases in funding to support the retirement system for police officers and firefighters should be borne by the employees and not the cities. In the event there is a reduction in the funding needed to support the retirement system for police officers and firefighters, cities contribution to the system should be reduced. 411 SubroQation Currently in Chapter 411 cities are not allowed to seek reimbursement from Third Parties for costs incurred for Police and Fire injury and illness claims. As such, a Police or Fire employee may collect against the City for an injury or illness claim and collect a second time for the same incident against a Third Party. If the employee is successful in getting 7 payment from the Third Party, the City is currently not able to obtain reimbursement (subrogate) from the Third Party payment. Requested action: Amend Chapter 411 to allow cities to seek reimbursement from third parties for costs incurred for Police and Fire injury and illness claims. Seasonal Emplovees Currently temporary, seasonal employees that accept a job that starts on a specific date and ends on a specific date are eligible to collect unemployment. For example, temporary employees hired for 3 or 4 months to mow lawns during the summer are allowed at the end of the summer to collect unemployment even though they know the job is seasonal when hired. This puts a costly burden on the employer. Requested action: Amend the unemployment law so that seasonal employees are not allowed to collect unemployment. Underaqe and Binqe Drinkinq Current legislation provides for a penalty to be placed upon the establishment that serves minors, however, only a simple misdemeanor penalty is placed upon the underage person attempting to purchase alcoholic beverages. This does not discourage this problem, which is particularly prevalent in college age students. In an effort to combat underage consumption and "Binge Drinking" by our college age population, we would ask legislative consideration to increase the simple misdemeanor penalty found in Iowa Code Chapter 321.216 and 123.50 to a higher penalty. Requested action: Pass legislation to increase the simple misdemeanor penalty found in Iowa Code Chapter 321.216 and 123.50 to a higher penalty. Expand Definition of Good Moral Character One of the criteria for the issuance of a State of Iowa liquor license is determined by "Person of Good Moral Character" as defined in State of Iowa Code 123.3 (26)(d). The State takes into consideration the local municipalities local interpretation of "Person of Good Moral Character" prior to issuing a liquor license. Requested action: Review the definition 123.3(26)(d) "Person of Good Moral Character" by consideration to expand felony convictions to include appropriate indictable misdemeanors (i.e. convictions of OW.I. (321J.2), Bootlegging (123.59) and other such liquor violations) Civil Riqhts Enforcement Civil rights agencies are the law enforcement tools for civil rights laws. The Iowa Commission works in partnership with the Dubuque Human Rights Commission and other local commissions to successfully leverage resources to enforce civil rights laws across Iowa. The Iowa Commission also is responsible for enforcement of civil rights in Dubuque County. The state and local agencies are leaders in efforts to educate business and industry on civil rights laws, on diversity, and preventing discrimination. The Iowa Civil Rights Commission has faced severe budget reductions and is currently operating at the lowest staffing levels in twenty years. Reduced support for the Iowa Civil 8 Rights Commission impedes its ability to protect the public, and sends the wrong message regarding the value we place on diversity and inclusivity, at a time when we are struggling as a state to attract economic development and build our workforce. Civil rights protection provides the mechanism to address and prevent problems in the workplace that could hamper new Iowans from locating and remaining in our state. Requested Action: Support budget increases for the Iowa Civil Rights Commission to enable the Commission to return to adequate staffing and to further its enforcement initiatives. Passenaer Rail Service Included in Envision 2010: 10 community projects by 2010 is Passenger Rail Service from Chicago to Dubuque. The Illinois Legislature has indicated support for this project, however, they have not approved the estimated $5 million in subsidy that will be required for this service to run from Chicago to East Dubuque, Illinois. City representatives from East Dubuque, Illinois and Dubuque, Iowa are working with Illinois legislators to request this funding. Amtrak has also indicated support for this project and has agreed to complete a feasibility study for the service to run from Chicago to Dubuque, Iowa. This study is anticipated to be completed by February 2007. This study will identify costs needed to complete the passenger rail service line from East Dubuque, Illinois to Dubuque, Iowa. The Iowa Department of Transportation will be an important partner in providing funding and technical support for the last leg of the service into Dubuque. Requested action: Support efforts to request funding from the Iowa Department of Transportation to fund the passenger rail service line from East Dubuque, Illinois to Dubuque, Iowa. Airport Issues AIR Fund Designate at least $3 million a year for aviation projects and programs through the establishment of the new Aviation an Iowa Resource or AIR fund. Vertical Infrastructure funding Maintain Commercial Service Vertical Infrastructure funding of at least $1.5M and General Aviation Vertical Infrastructure funding at $750,000 for landside development projects at public-owned, public-use airports in Iowa. Revenue source: use tax on aircraft sales. State Aviation Fund Beginning in FY 2008, revenues from aviation fuel taxes and aircraft registration fees will be deposited into the State Aviation Fund. Revenues from use taxes collected from aircraft sales must also be deposited into the State Aviation Fund to be reinvested into Iowa's air transportation system. Airport Property Taxation Public property is exempt from property taxes. Publicly-owned, public use airports are pubic facilities. Airports need legislative clarification that airport property used for agriculture and other (non aviation uses) is not subject to property taxation. The main purpose of such property is to maintain runway protection zones and compatible land uses for the safety of aviation activities. 9 Eminent Domain Publicly-owned airports are important public facilities. Airports and their sponsors need to have the ability to use eminent domain when necessary for publicly-owned airport projects that playa role in maintaining and increasing safety and in meeting the growing air transportation demands. Rebuild Iowa Provide for continuation of Rebuild Iowa Infrastructure Fund appropriations for vertical infrastructure projects at both commercial and general aviation airports. Expand Cities' Extraterritorial Jurisdiction Cities have extraterritorial jurisdiction (ETJ) for up to two miles from their corporate limits for subdivision review and approval only if the County has zoning for the rural areas. Extending the cities' ET J to include review and approval of zoning changes would facilitate planned and managed growth. Legislation should provide incentives for governments to voluntarily plan together, and identify recommended land use impact to be considered during the planning process. The League supports legislation that expands land management practices such as ET J of cities to include review and approval of zoning changes. Requested action: Support legislation enabling cooperative planning and effective land management practices. Property Owners on Historic Preservation Commissions Section 303.34 of the Iowa Code requires that: "At least one resident of each designated area of historical significance shall be appointed to the commission." This requirement is problematic for the City of Dubuque's Old Main Historic District, which is primarily commercial. It would be beneficial for the City in the recruitment and retention of commissioners to be able to appoint property owners to represent historic districts. Furthermore, since historic preservation regulations apply to the rehabilitation, renovation and restoration of property, allowing property owners to serve on the commission would be appropriate. Furthermore, some Iowa cities are experiencing burgeoning commissions as historic districts are designated and representatives of each district are appointed. To avoid "over-populating" a commission, allowing a majority of the districts to be represented on a historic preservation commission would be appropriate. Requested action: Enact legislation allowing property owners to represent a majority of the historic districts on the Historic Preservation Commission. Appeal of Actions bv Historic Preservation Commission Section 303.34 of the Iowa Code states that an aggrieved party may appeal the action of a historic preservation commission to the City Council, and then to district court. The City Council, like the court, has to consider whether the commission exercised its powers and followed the guidelines established by law and ordinance, and whether the commission's action was "patently arbitrary and capricious." This process places the City Council in the difficult and uncomfortable position of interpreting technical guidelines and determining their appointees "arbitrary and capricious." The City Council would support an alternative process. 10 Requested action: Consider legislation providing an alternative appeals process regarding an action of the historic preservation commission. Ambiant Air Qualitv Rules In July 2004 the Environmental Protection Commission set H2S Iimites at 30 parts per billion (ppb) with a 60 minute average. Due to the fact that this is an air quality rule, it has to effect everyone, farmers, industries and municipalities alike. This rule could have disastrous effects on wastewater plants causing cities to provide for major H2S, ammonia and other mercapton control system that are very expensive and costly to operate. Requested action: Enact legislation that exempts local government from the 30 ppb rule. 11 IOWA LEAGUE OF CITIES 2007 LEGISLATIVE PRIORITIES Economic Development Protect and enhance economic development tools enabling cities in Iowa to promote economic improvement throughout the state. Background The role of city government in economic development is crucial. Economic activity requires roads, streets, airports, water and sanitation. New jobs necessitate more and better housing. Growing businesses seek quality of life amenities for employees and families, such as parks, recreation and libraries. Protection and safety of property and life must be assured. This can only be accomplished with the strong support of an effective city government. Changes are needed to eminent domain law to ensure that blighted areas can be improved and public projects can proceed. Tax increment financing (TIF) should be supported as an important tool used by cities to promote economic development. Local government financing tools need to be diversified, such as enabling the option of a sales tax TIF for certain developments or enhancing other alternatives. Successful quality of life programs need continued funding, such as Vision Iowa, CAT funds, Iowa Great Places, the Iowa Main Street program, and tax credits for historic preservation. Pensions Support legislation that strengthens actuarial soundness and fairly allocates the contribution rates among participating parties while opposing any expansion of benefits under the Iowa Public Employee Retirement System (IPERS) or the Municipal Fire and Police Retirement System of Iowa (MFPRSI). Background Personnel costs are the primary expense of operating a city. The rising costs of pensions and other benefits have put pressure on city budgets in recent years. The Code of Iowa mandates pension coverage for city employees. Chapter 97B deals with the Iowa Public Employees' Retirement System (IPERS), which covers most city employees. The exceptions are some city managers with alternative pension plans and those employees covered by the Municipal Fire and Police Retirement System of Iowa (MFPRSI). This coverage applies to cities with a population exceeding 8,000 prior to 1990 and is defined by Code of Iowa Chapter 411. Although legislators traditionally focus on pension issues in even-numbered years (which are also general election years), the League will advocate for increased state contributions to the Municipal Fire and Police Retirement System in 2007. City contribution rates to the program are uncapped and have risen without relief in recent years, even topping 30%. Employee contributions are capped at 9.35% of earnable 1 compensation. The state currently contributes approximately $2.7 million each year to the MFPRSI system, which is less than 1 % of funds needed each year to maintain the soundness of the system. Any new benefits or expansion of existing benefits will be opposed. Other improvements that would allow public pension systems to operate more equitably could include clarifying subrogation provisions, and adopting more long term actuarial smoothing assumptions and up-to-date mortality tables. Propertv Tax Reform Support a property tax reform initiative that eliminates inequities caused by rollback; improves accountability to taxpayers; allows cities to continue to provide locally determined services effectively and efficiently; and enables and protects other city revenues. Background Property taxes are an important revenue source for cities and other local governments. The League believes that reform of the current system, including changes to Rollback, and Property Tax Credits is needed to improve accountability, equity and stability. Legislators will consider property tax reform legislation again in 2007. Property taxes are an important revenue source for cities and other local governments. Since 1978. Iowa's property tax system has functioned under a "rollback formula" that has shifted burdens amonq classes of property, while the general fund levy limit has gradually impeded the ability of cities to provide needed local government services. The League believes that reform of the current system is needed to improve accountability, equity and stability. The effect of any property tax system changes on municipal financing tools, such as tax increment financing (TIF), must be considered and bond ratings must not be adversely impacted. Property Tax Credits The Code of Iowa mandates that local governments provide property tax credits to property owners including the homestead credit, military service credit, low- income/elderly credit, and several farm credits. The Code also provides that the state will reimburse local qovernments for these credits. The state has under funded the credits for the past several years, and did so aqain for Fiscal Year 2007, but there were no threats to force local governments to absorb the shortfall. Local Government Finance Priority Enable and enhance revenue alternatives, and reduce costly mandates, to allow cities to efficiently manage vital services including public safety, transportation, utilities and other quality of life amenities. 2 Background Local government efficiency depends not only on reform of the property tax system, but on enabling appropriate revenue sources and reducing mandated practices that are costly and yield little benefit. Revenues that should be addressed include but are not limited to fire service levies and fees, utility franchise fees, water quality funding, road improvement funding, and funding for amenities such as parks and trails. State incentives to encourage local government sharing should be provided, including resources for joint planning efforts. Publication requirements for cities and 28E entities should be revised to reduce costs while ensuring access to public information. 3