Mt. Pleasant property tax levy remains at $12.18 per $1,000 taxable valuation

By BROOKS TAYLOR

Mt. Pleasant News

Mt. Pleasant City Administrator Brent Schleisman is happy, or at least he was last week.

Not only is the city?s fiscal 2016 budget completed, but the city was able to keep the property tax levy at $12.18 per $1,000 taxable valuation. The city council hosts the public hearing on the budget tomorrow (Wed.) at 5 p.m. in the council chambers of City Hall.

There is still a significant question mark affixed to the budget. Mt. Pleasant?s local option sales tax (roughly $700,000-$800,000 annually) is due to expire on Dec. 31, 2015, unless city residents pass a measure in May to extend the tax indefinitely (no sunset clause is included on ballot language).

Schleisman said the uncertainty of the sales tax does throw a wrench into the picture. ?We don?t have any new capital projects planned that are not funded,? he said, adding that is due to the question over sales tax proceeds.

Mt. Pleasant has had the tax for 20 years. During the first 10 years, sales tax funds were used for the aquatic center. Tax revenue the past 10 years has been earmarked for capital projects, largely street reconstruction work such as Washington Street, Grand Avenue and Iris Street.

Regardless of whether the ballot measure passes, the city will construct two streets (Prairie and Savannah) in the Crossroads Business Park east of Hy-Vee.

?If the sales tax does pass, we have several residential streets we want to work on and that will help us to do an asphalt overlay and patching of concrete streets,? Schleisman said.

The 2016 budget includes $22,049,41 in expenditures, slightly down from this fiscal year?s $22,265,380. Revenue is estimated at $22,824,124, up over a half-million dollars from 2015?s $22,258,310.

Finally, the city is projecting a fiscal-year ending fund balance of $9.5 million compared with a beginning fiscal year balance of $8.78 million.

City valuation on which the budget is based dropped by $973,025, the city administrator said, meaning a loss of about $2,600 in general fund tax dollars.

In addition, the commercial valuation rollback which was 5 percent last year is going to 10 percent this year. Thus far, the state has backfilled the loss in property tax dollars from the rollback, but Schleisman isn?t taking bets on whether the state will continue to replace the tax revenue.

This year?s residential property tax rollback is 55.73 percent, meaning residential property is taxed at 55.73 percent of its assessed valuation. Doing some easy math, a house with an assessed value of $100,000 would be taxed at $55,730.

Schleisman said the budget process was fairly easy for the city. ?We have been preparing for losses in commercial property tax. We are not cutting anything and we are still escrowing for future capital equipment.

?We can operate the way we have been,? Schleisman continued, ?but we may not see the improvement in infrastructure that we have seen.?

Exploring the budget further, the following is a look at some of the major funds.

General fund

Hotel/motel tax dollars are projected to remain the same at $140,000.

The general fund reflects a contribution of $100,000 from Mt. Pleasant Municipal Utilities.

Employee benefit levy is decreasing from $1.05 per $1,000 taxable valuation to $0.92934 this year.

Loss of commercial property tax dollars due to the rollback is $144,961.

Capital purchases amount to $199,600.

City salaries include a 2.75 percent increase and health insurance premiums increased by 20 percent.

Capital projects fund

The city will receive $994,000 in grant funds that will help pay for the Mapleleaf Drive reconstruction project

The Mapleleaf project, budgeted at $2M, also will be funded by $1,000,000 in loan receipts (general obligation bonds).

Debt service

Budget includes a transfer of $185,176 in TIF money into the fund.

The debt service levy is at $2.15, which is an increase of $102,136 in new debt to fund the North Iris Street and Mapleleaf Drive projects and a new fire truck.

Most of the debt service fund expenses include bond payments for the library/civic center, fire truck and Crossroads Industrial Park. Total payments come to $1,197,022.

The city?s current debt limit is 28 percent.

Road fund

Beginning balance projected at $637,941 with total revenue (which includes beginning balance) estimated at $1.46M.

Included in the budget is $56,000 for patch and repair work on city streets, $20,000 for the chip-and-seal program and $61,000 in escrow for future equipment purchases.

Total expenditures amount to $901,863.

Sanitary sewer fund

Base rate will stay at $7.50, flow rate increases to $4.60 from $4.40 monthly per 1,000 gallons of water (effective July 1).

Total revenue generated is projected at $1,740,500 and the beginning balance will be nearly $900,000.

The budget has a bond payment of $849,686 for the wastewater treatment plant, $20,000 to fix private sewer repairs that may arise, $40,000 to replace aging equipment at the wastewater treatment plant and $46,500 for equipment escrows.

The flow-rate increase, Schleisman said, is because of a multi-phase plan to meet new Iowa Department of Natural Resources regulations. The DNR is mandating that wastewater is disinfected. ?That will cost us $7 million over five years,? Schleisman said. ?We have to be in complete compliance by 2020. It just takes a lot of money to be in compliance because it is expensive to treat wastewater.?

Solid waste fund

Beginning balance of $187,690 and garbage sticker prices will remain at $1.60.

The recycling, Haz-chem and administrative fee paid to the Des Moines County Solid Waste Commission is increasing effective July 1 by a dime per month to $3.45 monthly.

Mt. Pleasant?s base solid waste fee will increase July 1 to $2.75 a month.

Total projected revenue is $412,200.

The city is budgeting $13,000 in escrow for a new packer and $10,000 for a tub grinder for the compost site.

Tax-increment financing (TIF)

The city is requesting $583,500 in TIF in fiscal 2016.

Expenditures are for bond payments for the Crossroads Industrial Park, library/civic center, west interceptor sewer, Linden Drive extension and a $15,000 payment for the city?s share in the industrial spec building.

Unspent funds in each of the TIF district balances have been earmarked to pay for construction of Savannah and Prairie streets.

Passage of the 10-cent gas tax also will fuel about $140,000-$150,000 into the budget, Schlesiman said. Those funds have not been designated.

Though the 2016 budget process went well, Schleisman is concerned about future budgets. The property tax rollback on multi-family housing (three families or more) and assisted living complexes begins next year. It is a seven-year rollback and cities don?t know the percentage of rollback annually. At the end of seven years, multi-family and assisted living will be taxed as residential so will have the same rollback as residential property. Currently, they are taxed as commercial property.

?That could hurt and be a game-changer,? the city administrator said concerning the rollback on multi-family and assisted living housing. ?We have to really look at it hard. We could lose as much as $250,00 (in property tax revenue) over the seven years.