The City of Perry could receive a potential budget cut of up to $80,000, which would amount to $40,000 taken from the general fund, if a bill to eliminate backfill dollars were to pass in the legislature. According to the Iowa League of Cities, a bill is being created to “end replacement claims to cities, counties and schools as a partial reimbursement for the property tax decreases originating from the legislation passed in 2013.”
The benefit fund for the FY 2019 could potentially eliminate $28,965 and equals $.18553 per $1,000 valuation, according to information provided by the City of Perry. In addition, the Debt Service Fund for FY 2019 could also be potentially eliminated, taking away $12,733, with $.08156 per $1,000.
Perry’s general fund aids expenditures throughout the following city departments: police, fire, library, parks and recreation, airport, garbage and recycle, administration, cemetery, and planning and zoning.
According to information provided by the City of Perry, the FY 2019 backfill for the General Fund is $41,106, which is equal to $0.2633 per $1,000 of valuation. However, the General Fund levy can not be increased as it is capped at $8.10 per $1,000 valuation.
“The debt levy, the benefit fund, we can levy in that for whatever we need, whereas the general fund - we are capped at the dollar amount and then we have to make up that difference through other things,” said Perry City Administrator, Sven Peterson said.
“The way the senate has came out with their proposal was to cut it a third this year, a third next year and then do away with it,” Peterson said. “That is at least phased a little but, but it’s a significant impact when our growth isn’t necessarily going to be keeping up with that.
“Over the last couple of years, it’s felt like we started to cross that mountain of kind of getting our heads just above water, at least treading water, and when this type of thing happens it’s definitely a large step backwards.”
If the state were to spread the cut out over a few years, the impact might not be as great, Peterson says.
“Spreading it out over those few years might not have as much of an impact on us meaning that $12,000 range, $13,000 per year, so that at least is more manageable, but it’s definitely going to impact the other parts of the levy,” Peterson said. “That other $40,000 is kind of a hard number with our debt and our benefits - that’s not something that we can just cut necessarily.”
While the bill has not been yet approved, cities are required to have their FY19 budgets certified by March 15.
“It’s hard,” Peterson regarding potential preparation for the bill’s passing. “It’s a decision that isn’t made locally to cut those property taxes, and then beyond the commercial rollback is the multi-residential rollback which previously that was taxed at 100 percent like a commercial property.
“We’re in an interesting position here in Dallas County because we’re in the fastest growing county in Iowa and then fifth in the nation, but we aren’t necessarily seeing that kind of growth in Perry yet.”
According to the City of Perry, if the bill would pass, the levy would be increased in the debt service and benefit funds to make up for the lost backfill dollars in those funds, bringing the total levy to $18.13534 per $1,000 valuation.
“Proposed levy rate with backfill: $17.86825 per $1,000 valuation; add the losses in the Benefit Fund and Debt Service Fund by $.26709; levy rate caused by loss of backfill is $18.13534 per $1,000 valuation.”
Peterson expressed his frustrations with the change.
“It’s just really sad that the state would do this to cities, counties and school districts because they get the glory of passing what they refer to as the largest tax cut in Iowa history, [with] really not much of an expense to them,” Peterson said. “They get to cut their backfill and say well it’s up to the cities and it’s the cities’ fault.
“It really just kind of villainizes other local governments and puts them in a precarious situation for trying to deal with that issue on a local level.”
Those wishing to voice their opinion on this issue are encouraged to contact their legislators. House representative Clel Baudler can be reached at the State Capitol at (515)281-3221 and Sen. Jake Chapman can be reached at (515)650-3942.