WATERLOO — Property taxpayers in Waterloo are slowly gaining ground on those in other large cities across the state.
Data compiled by the Iowa Department of Management show the overall property tax rate paid by Waterloo property owners dropped from $40.33 to $40.08 per $1,000 of value for tax bills payable this fiscal year.
It was the second straight year the tax rate fell, moving Waterloo from the ninth to 10th-highest taxed of the 22 cities with at least 20,000 residents.
It also means most residential property owners saw a nearly 3 percent drop in tax bills mailed last week, provided their assessed values did not increase in 2017 through a home improvement project or revaluation.
“I think we’re on the right track; we’ve just got to continue,” said Waterloo Mayor Quentin Hart. “When you factor in all of the other services we provide, that number continues to go down.”
Waterloo’s sewer, water, garbage and storm water fees are among the lowest in Iowa, while its franchise fees collected on gas and electric utility bills hover at the state average.
Despite being in the middle of the pack overall, the city’s share of the overall property tax rate ranks among the highest of larger cities. Only Ottumwa, Council Bluffs and Fort Dodge have higher municipal rates than Waterloo.
Waterloo’s overall tax bill is mitigated by a lower-than-average levy for public schools and average county government rate.
At least two City Council members said the city government’s tax rate is still too high, while the overall bill is a problem when competing for new residents and industry.
“I have heard from those that are involved with economic development and property development, and they have consistently said our high tax rate is one of the main obstacles to their success,” said Councilman Steve Schmitt.
Schmitt and Councilwoman Margaret Klein said a statewide comparison of the 22 largest cities masks a more relevant discrepancy.
“I don’t believe that Waterloo is competing against cities like Council Bluffs or Fort Dodge,” Klein said. “I believe we are competing against cities like Cedar Rapids, Dubuque and most especially Cedar Falls.
“We must continue to work to bring our city tax askings in line with our eastern Iowa neighbors,” she added. “City government can cost less, because it is costing less in other cities.”
Cedar Falls does enjoy one of the lowest property tax rates in Iowa at $33.23 per $1,000, which is up from the past two years largely due to a school bond issue approved by voters.
Ames and Dubuque are the only two cities over 20,000 residents with lower overall rates than Cedar Falls.
While reasons for the city of Waterloo’s high municipal tax rate are subject to frequent debate, statewide statistics seem to show low property values are a bigger issue than perceived out-of-control spending.
Despite having the fifth-highest population, the value of all property available for taxation in Waterloo ranks 12th in the state. That means the rate must be higher to collect the same tax dollars as a city with a larger tax base.
Meanwhile, Waterloo collected $579 in property taxes per person last year, which is the fourth-lowest of the state’s 11 largest cities and well below the $804 per capita collected in Cedar Rapids. Waterloo’s 557 full-time equivalent city employment level is also well below the large-city average.
Hart said Waterloo voters’ decision to use the 1 percent local option sales tax revenue entirely for street repairs also plays a factor in Waterloo’s property tax rate being higher.
“Some of the cities use local option sales tax for property tax relief or to work on other capital projects that save (property tax) money,” he said.
Dubuque, for example, uses 50 percent of its sales tax on tax relief and another 20 percent on building maintenance. Waterloo borrows and uses property taxes for most city building projects.
Hart also said the property tax rate is not the only measure of a community’s success.
“We are absolutely focused on providing quality services for our citizens,” he said.