WATERLOO — A city budget up for approval this week appears to have several unsettled issues.
Waterloo City Council members are scheduled to hold a public hearing at 5:30 p.m. Thursday in City Hall on a property tax rate and budget for the fiscal year starting July 1.
But several council members during a work session Monday either voiced opposition to elements of the proposed $154 million spending plan or called for more discussion on possible options.
Mayor Quentin Hart has proposed a budget boosting the city’s property tax rate from $17.60 to $17.76 per $1,000 of taxable value.
“For some of the departments it’s skin on the bones, but we’re continuing to look at ways to share services and do different things,” Hart said. “For the most part I believe we can continue to provide services.”
The city’s tax base fell this year due to a state order reducing the portion of home values available for taxation and falling commercial property values. So the higher tax rate would generate just $33,639 above the $41.1 million in tax revenue collected this year.
Few departments were spared from budget cuts as the city looked to cover the increased cost of employee wages and benefits and contractual obligations and to make up for lost revenue from its expiring cable franchise and other sources.
The police department would avoid staff reductions under Hart’s budget, but two vacant firefighter positions would not be filled next year.
Another key element of Hart’s plan would raise the current gas and electric utility franchise fee from 3 percent to 3.5 percent. That fee, collected on MidAmerican Energy customer’s bills, would raise an estimated $450,000 annually.
The budget also anticipates the city will get more than $1.7 million in property tax replacement funding from the state. Iowa legislators have proposed reducing or cutting that “backfill.”
Councilwoman Margaret Klein said she did not believe the city should expect the backfill funding, a move that would require much deeper budget cuts.
“Other cities have been very wise and have not figured that number into the budget,” Klein said. “I think we should be smarter.”
Hart said the city could boost the utility franchise fee even higher — it has a maximum of 5 percent by law — should the Legislature yank the backfill revenue after the city certifies its budget.
The average homeowner would actually see a cut in their property tax bill next year despite the increased tax rate. That’s because a state rollback order reduced the portion of a home’s assessed value available for taxation from 56.9 percent to 55.6 percent.
Under Hart’s proposed $17.76 tax rate, residential property owners would see a 1.41 percent cut in the city’s share of their tax bills. The owner of a home with an assessed value of $100,000 would see the city portion of their tax bill next fall from $1,002 to $987, or $15.
Commercial and industrial property owners, which didn’t see a change in the rollback but have enjoyed tax cuts in eight of the past 10 years, would see just under a 1 percent increase in city taxes.