Legislative Issues - State
THE CITY OF ~
DUB E
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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.
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Michael C. Van Milligen
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Attachment
cc: Barry Lindahl, Corporation Counsel
Cindy Steinhauser, Assistant City Manager
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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.
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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
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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
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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
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"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.
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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
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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
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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
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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.
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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.
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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.
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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
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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.
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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