Washington city, county to cut tax rates, but landowners will still pay more

WASHINGTON — A piece of state legislation called House File 718 has mandated tax cuts across local governments in Iowa. But even as cities and counties slash their levy rates in proposed budgets for Fiscal year 25, their projected revenue comes in higher than in the current fiscal year.

The reality stems from a sophisticated equation of ever-changing property values, assessment rollbacks and levy rates. And it’s more than a little confusing to taxpayers.

Most who received state-mandated public notices of their community’s proposed levy changes saw red ink on lines showing their taxes due per $100,000, and top-line levy rates lower than last year’s.

Even seasoned budgetary professionals said they found the letters uninformative, with no mention of rollbacks and potentially misleading figures describing new taxes owed.

“The effective tax rate they have on here is, I think, nonsensical, because that’s telling you (the taxes) if they kept at their current (property value),” said Washington County Deputy Auditor Tammy Stewart, during a work session on March 28. “The state makes no reference to the rollbacks on here … there’s no mention of that for the public to be able to figure out.”

How’s the math work?

It seems paradoxical that tax payments would go up while levy rates go down. The equation is complicated.

2023 saw properties reassessed across the state, as they are every odd-numbered year. Washington County Assessor Christy Tinnes said the process used sale values from 2022 to determine the real estate’s value adjustments. That resulted, on average, in a 26% uptick of residential property values, and 15% increase for commercial ones in Washington County, going into next fiscal year.

The county’s ag land assessments, meanwhile, jumped an eye-popping 45%, according to the Iowa Department of Revenue.

Tinnes stressed that the assessor’s office does not “create value” to ensure tax revenue. Its evaluations are in line with high property values during 2022’s high-demand housing market, a trend extending far beyond Washington County.

"We are required to follow the market, regardless of what caused the changes in the market. We follow the market transactions that buyer/sellers are making,“ said one FAQ sheet distributed by the assessor’s office. ”The buyer and sellers’ determination of what a fair price was, dictates the market. If it becomes a deflated market we would follow that as well.“

Higher assessments are balanced against a change in rollbacks: a limit on the percentage of a property’s assessed value that can be taxed. For residential properties, the rollback has gone from 54.6501% last year, to 46.3428% this year.

In terms of which levies get adjusted and how much, Washington County Budget Director Cyndie Sinn said HF 718 had tied the local government’s hands, complicating efforts to provide public services.

The bill set a cap on future years’ levy rates. Washington County, for example, has never levied the maximum amount for its rural services fund. But the legislation now bars the county from growing the levy too far beyond the previous year’s, effectively creating a lower cap on the revenue stream than for other, higher-taxing counties.

Sinn said that amounted to punishing a history of fiscal responsibility.

“We’ve always been conservative, and we’ve never had the max levy (for) rural services, … but we’re getting penalized,” she said. “They’re putting their thumb on you.”

Taxpayers are frustrated. So are elected officials.

The net-increase of tax asking has concerned landowners who say they don’t make enough to keep up with the tax payments.

Some living on fixed income say they worry about making ends meet. Others argue the payment is just plain unreasonable. Russell Jenkins, of Crawfordsville, claimed his property taxes on a $48,000 home there were higher than those on a roughly half-million dollar house he previously lived at in Georgia.

“Being retired military, I can live anywhere I want, and I’m not so sure Iowa’s going to be it,” he said at a public hearing for the county’s budget proposal. “I was born and raised here, I hate to say that, but the taxes keep going up … I just don’t get it. I don’t know where that money’s going.”

Taxing authorities say they’re doing everything they can to keep balanced budgets.

The city of Washington expects to collect around $300,000 more in property taxes under its proposed budget, compared to this fiscal year. The overall levy rate would go from 16.2556%, down slightly to 16.14459%.

City Administrator Deanna McCusker said the extra income would help finance municipal property insurance, employee benefits, and pay off debt that would otherwise rely on water bill payments.

“We strive to be fiscally responsible, and we kept our overall tax rate the same, or actually a little lower than last year,” said McCusker. “We’re only asking for what we need to make our operating expenses … It’s not like we’re taking in any more money than we need.”

The county’s proposed expenditures for Fiscal Year 2025, meanwhile, come in over $1.5 million higher than the current fiscal year’s, according to a draft budget summary acquired by The Union. Much of that change is driven by capital projects, public safety investments, and paying back a four-year loan to finance big-ticket emergency service infrastructure like police cars and a communication tower. Those increases are offset somewhat by an over $1.86 million reduction in road and transportation expenditures.

Much like the city, Washington County officials say they don’t know what else they could cut without sacrificing essential government services.

“This action needs to be taken for us to continue operations that we have, mainly emergency services and emergency communication,” Supervisor Jack Seward Jr. said ahead of a vote to finalize the bond agreement. “It’s something we cannot do without. You’ve got to do what you’ve got to do, and this is something that I feel we have to do.”

County Supervisor Marcus Fedler, meanwhile, said he still saw places to reduce spending, and hopes to do so gradually over the next few years in an effort to prevent abrupt ends for needed services. Some options he listed included road closures, and reduced road maintenance.

Still, the supervisor cautioned that he wasn’t sure just how much lower the county could go on its tax asking.

“I hope at some point in the future, we can have that conversation about some of these line items. All of that to say, it’s not a big number, it’s not,” he said. “It’s probably $800,000 that, in theory, could be cut immediately and be done.”

Comments: Kalen.McCain@southeastiowaunion.com