By Mike Whittlesey
In the coming days, the City Council of La Porte City will put the finishing touches on a proposed budget for FY18, which covers the period of time from July 1, 2017 to June 30, 2018. The timeline for completing next year’s budget includes a public hearing that must be conducted before the budget is formally adopted. By law, the City’s FY18 budget must be adopted by March 15.
The City receives revenue from more sources than the average citizen might think. The one that matters most to taxpayers, though, is the levy rate, the number that helps determine the amount of taxes each property owner will be assessed.
Much has been made of the fact that La Porte City’s property tax levy is the second highest rate among eight communities in Black Hawk County. For the current fiscal year, La Porte City’s levy rate of 14.99574 is surpassed only by Waterloo’s 17.60522. What do these numbers mean? In La Porte City, property owners pay just under $15 for every $1,000 of property they own. That figure is cut roughly in half when the state’s tax rollback percentage is factored in. So in 2017, the owner of a $100,000 home in La Porte City was assessed around $750 in taxes to support the services the City provides its residents.
If you only consider levy rate as the primary indicator of tax burden, some might say La Porte City’s number is high enough to send Chicken Little off in search of the King. Fortunately, the personal property tax sky is not falling in La Porte City, because levy rate alone does not tell the whole story. There is another number that is far more important, one that completes the personal property tax equation. That number is taxable valuation, which is the overall value of a property multiplied by the state rollback for that property class.
The City of Hudson, nearly identical in population to La Porte City, serves as an excellent example of the importance of property value. With a levy rate of 11.51359, nearly $3.50 less than La Porte City, it stands to reason that Hudson taxpayers pay considerably less in city taxes than their LPC counterparts, right?
Wrong. They will actually pay $195,000 more in total city taxes than property owners in La Porte City. How is this possible? The City of Hudson’s taxable valuation is nearly $98 million, considerably more than La Porte City’s $62 million. In the words of an eight year old: “They got more stuff.”
The same is true in Jesup, another comparably sized community in Black Hawk County. Despite a slightly lower tax rate, property owners there will pay $375,000 more in city taxes than their La Porte City neighbors. When measured on a per capita basis, that translates to an additional $148 for every man, woman and child living in the City of Jesup.
From the perspective of an individual taxpayer, a lower assessed property value is not necessarily a bad thing. After all, when the Tax Man cometh, lower values mean he will take lesseth of your paycheck. Lower assessed values, though, present a very real challenge for city government because they limit the number of dollars that can be generated by a taxing body. Growing communities like Hudson and Jesup have the luxury of setting a lower tax rate because they have significantly higher property values. Slower growing communities, like La Porte City, must operate more efficiently in order to keep property taxes from spiraling up and out of control.
Where glass half empty folks see La Porte City’s taxes as too high (one of the highest levy rates in the county), glass half full people admire the excellent work done by elected officials and city employees to make services such as 24/7 police protection, a top-notch fire rescue and ambulance crew, along with a host of recreational opportunities for young and old alike, available at a per-capita cost that ranks fourth lowest in the county despite ranking next to last in per-capita property value.
Each year, the City Council faces the challenge of providing and maintaining services while trying to hold the line on property taxes. It’s a process that usually results in a few proverbial acorns falling from the sky. The trick is to make sure the sky doesn’t fall with them.