WATERLOO -- Black Hawk County is planning to use $1.6 million of its cash reserves to help lower property taxes in the fall.
But two members of the county Board of Supervisors contend the county should spend down even more of its general fund balance, which has grown to more than $15.3 million.
Supervisors Linda Laylin, Dan Trelka and Chris Schwartz voted in support of a proposal using $1.6 million in reserves instead of taxing for capital projects and equipment in the budget year starting July 1.
The plan would lower the county's urban property tax rate from $6.69 to $6.30 per $1,000 of property value, resulting in a 3.7 percent cut in the county's share of a homeowner's overall tax bill.
But Supervisors Craig White and Tom Little said even more cash reserves should be spent to drive the tax rate down even more.
"We're taxing too much," Little said. "I'm still saying we're keeping too much of the taxpayers' money."
All five supervisors agreed the county's current level of cash reserves had grown too large after numerous years where more tax dollars were collected than spent.
While the Government Finance Officers Association recommends general fund balances equal to 25 percent to 42 percent of general fund expenses, Black Hawk County's $15.3 million reserves represents 38 percent.
At issue was just how much and how quickly those reserves should be reduced.
Finance Director Susan Deaton and Auditor Grant Veeder both cautioned the board about spending too much of the reserves in one year and urged them to avoid using cash reserves to cover ongoing operating expenses.
"I'm not opposed to bringing this percentage down," Deaton said. "I guess I don't want to do it all in one year."
Reserves used to cover operating expenses next year would be gone in 2020 and would not be available to cover the operating expenses, which would remain. That could cause property taxes to spike the following year.
"I think there's something to be said for trying to maintain a stable tax rate," she said.
Veeder reminded the supervisors that previous boards had put the county "in a hole" by spending reserves on operating costs, requiring the current board to turn it around.
"Yes we do have very healthy reserves now, but it turns around on a dime if you start using it for operating expenses," he said. "Those monies have to come from someplace next year, and those reserves are finite."
While Little said he generally agreed with the idea of not using reserves for operating costs, he called this year a unique situation. On top of the current fund balance, the county is expected to get between $2.5 million and $3 million from the sale of the Country View care center.
Other board members said the supervisors should address the Country View windfall when the books are closed on the facility and the full amount is known.
Most board members have indicated an interest in adding solar panels to county buildings to reduce future utility costs, which is a possible use for the Country View funds.
A public hearing and final vote on the budget is slated to March 5.