Mt. Pleasant boasts lower tax levy

FAIRFIELD - Municipalities differ slightly in the levies they charge to their residents.

For this coming fiscal year, Mt. Pleasant will be able to lower its tax levy 24 cents to $11.94 per $1,000 valuation, thanks in part to rising property values in the city that in turn spell more money in property taxes. Though Washington's budget is not yet final - its budget hearing is Tuesday, March 17 - the city is poised to maintain a property tax levy of $15.22, the same it's been for the past eight years.

Fairfield, meanwhile, has approved a tax hike of 40 cents, to $16.14 per $1,000. It's doing so to generate revenue for the ambulance service, which will be a city-run entity with assistance from the county and Jefferson County Health Center. City Administrator Aaron Kooiker said he hopes the increase is a temporary measure to build up a cushion in the ambulance service's budget, and that the city plans to decrease it or take it away after a year.

Mt. Pleasant

Mt. Pleasant residents will see a decline to their city levy in the next fiscal year. City Administrator Brent Schleisman said the levy will fall from $12.18 per $1,000 of assessed valuation to $11.94. The Mt. Pleasant City Council approved the measure as part of its 2020-2021 budget Wednesday night.

Schleisman said the decline was made possible because the city is getting more revenue from property taxes due to rising valuations. He said the property values in Mt. Pleasant rose by 4.1 percent. That means the city can keep the levy the same and expect 4.1 percent more revenue from property taxes.

Schleisman said the net effect on taxpayers of these two developments - the rising valuations combined with the lower city levy rate - will largely cancel each other out. Some residents will have to pay more in taxes, some perhaps a little less, and most about the same, depending on how the value of their property changed from last year.

'Properties keep going up in value. We grew by $12.3 million in taxable valuation,” Schleisman said. 'We're now at $338 million in taxable valuation.”

One reason that Mt. Pleasant is able to have a noticeably lower tax levy than Washington, Fairfield and other surrounding towns is that it has a municipal electric and water utility. It's had it for going on 100 years.

'We don't have to pay commercial electric rates for our buildings. We just pay whatever it costs wholesale,” Schleisman said. 'It's the same thing with water. We don't have to pay for the profit of a water company, which is a huge savings, too.”

Schleisman estimated that the utility saves Mt. Pleasant about $400,000, money that it would otherwise have to get from its residents in the form of taxes.

Washington

The Washington City Council is poised to approve a $15.22 per $1,000 valuation levy at its Tuesday council meeting. Brent Hinson said it was lowered from $15.82 to $15.22 a few years ago when Washington switched to having its dispatch county-funded.

'Washington citizens are now getting taxed by the county instead of us for that,” Hinson said. 'Technically, the city of Washington is 60 cents lower than we were, but that was just an offset to make sure people didn't see a tax increase.”

The Union asked Hinson if he and the council look to other cities for guidance when preparing their budget and, especially, their tax levies.

'Looking at just one city is not very useful, but looking at a bunch of cities is,” he said.

Hinson said he keeps tabs on what other towns between 5,000-10,000 people are doing, especially those outside of metro areas. Among those, he said Washington's tax levy is average.

'At the end of the day, the tax rate ends up being a policy decision made by the council based on what we do for capital projects, debt issuance, general services, etc.,” he said. 'And we're just one piece of the pie in levying taxes. The city of Washington is about 35 percent of a resident's total tax bill. The school is similar to that.”

Hinson said the best thing local governments can do is not get too terribly concerned with how they compare to other towns, but rather to be the best stewards possible of taxpayer dollars.

The Union asked if Washington had considered acquiring a utility like Mt. Pleasant did, and he said that the Iowa Utilities Board has made it nearly impossible for cities to form new electric utilities, arguing that would be bad for the electric market. He said some towns, like Wellman, Brighton and Winfield, have their own natural gas services, but Washington doesn't have any immediate plans to get one of those, either.

Fairfield

Fairfield City Administrator Aaron Kooiker said the city of Fairfield looks at other cities before approving its levy each year, but ultimately the levy reflects 'our cost of doing business.”

He said Fairfield's levy is a little higher than some surrounding towns like Mt. Pleasant, but he attributed most of that to Mt. Pleasant's electric utility. Mt. Pleasant can use the revenue from its utility to offset property taxes in a way Fairfield cannot.

'We've looked at doing that, too [acquiring a utility], but it would be an extremely large upfront cost,” Kooiker said. 'You wouldn't see any real savings for 20 years.”

The Fairfield City Council approved a levy of $16.14 per $1,000 for the 2020-2021 year, 40 cents higher than the current rate. The increase is due to paying for the ambulance service, hitherto done by a private company.

'Our hope is that the ambulance provides good enough service that when revenue comes in, we'll take that out of the levy next year,” Kooiker said. 'We put it into the levy this year because we don't know what the ambulance service will provide in revenue.”

The county and hospital will help with the deficits if there are deficits. Instead of deficit-financing the ambulance service, Kooiker and the city council felt it was best to collect a levy for it now, and then decrease or eliminate the levy once it was no longer necessary. Kooiker expects the additional 40 cents per $1,000 valuation to generate a little more than $100,000.