CEDAR FALLS – Residential property taxes would decrease nearly 2 percent while commercial and industrial properties would see a slight increase under preliminary budget figures to be presented to the City Council at a 5 p.m. work session Monday.
City staff will review those numbers with the council, which is anticipated to set a public hearing for Feb. 19 on the budget for the 2018-19 fiscal year that begins July 1.
The council will review budget numbers that show a 1.54 percent average decrease for residential properties, using the example of a residential property with an assessed valuation of $100,000. A $500,000 commercial property and $1 million industrial property each would see increases of 0.81 percent. Multi-family residential properties would see about a 3.8 percent decrease, based on a property assessed at $500,000.
Multi-family residential properties eventually are going to be taxed the same as residential property under state tax reform legislation passed several years ago.
Residential taxes are going down because property owners will be taxed on a lower portion of their property’s assessed value under a state-established “rollback.” The total residential tax rate will increase to $11.22 per $1,000 of taxable valuation from $11.13 per $1,000, but that increase is being more than offset by the rollback. Residents are paying taxes on 55.6 percent of their property’s assessed value, compared with nearly 57 percent last year.
While the overall budget is larger, the city saw a 4 percent increase in its valuation base, most of which is due to new construction and growth across property classes in the community as opposed to revaluation of existing properties. The budget has to grow to cover expenses of providing services to accommodate that growth, city officials said.
“We were fortunate we had very good growth in our residential and multi-residential (construction) to offset that,” said Jennifer Rodenbeck, the city’s director of finance and business services.
She noted the city is not assuming it will receive any “backfill” money from the state once promised under property tax reform legislation several years ago to sustain city services if tax revenues were lost as a result of that legislation.
“With the rollback and our tax rate, it’s going to be the same as it was two years ago,” City Administrator Ron Gaines said, noting the city increased residential property taxes 1.53 percent for the current fiscal year with a lower tax rate. “It’s almost a 3 percent difference in taxes” over the two years. “That (4 percent valuation) growth really helped us this year.”
“It does show that Cedar Falls is growing,” Rodenbeck said. “I guess if you drive around you know that. But it does confirm it.”
Total proposed fiscal year 2018-19 budget expenditures are $91.7 million — actually less than $96.1 million for the current 2017-18 fiscal year. Rodenbeck said that is due to the timing of large capital projects, including the Dry Run Creek sanitary sewer, University Avenue reconstruction and the Greenhill Road extension, funded in large part with non-property-tax revenues.
The total proposed tax asking for fiscal year 2018-19 is $20.8 million versus $19.7 million in fiscal year 2017-18. That increase, about 5.5 percent, is due to increases in the city’s trust and agency and pension expenses, salary settlements and the inclusion of additional staffing positions, including about five in public safety.