Most Johnson County property owners would pay more in county taxes under a proposed budget for next fiscal year.
The tax levies are part of an $85.7 million budget for fiscal year 2014, which starts July 1. That would be a 3.6 percent increase from this year’s budget, currently estimated at $82.7 million.
The budget also features an increased use of borrowing money for expenses that typically would be purchased with cash as the county responds to the use of tax increment financing by area cities.
The Board of Supervisors plans to hold a public hearing on the budget Feb. 27.
The proposed levy for property in unincorporated areas is $10.08 per $1,000 of taxable value, an increase from the current $9.84.
Supervisor Pat Harney said part of that increase is because the county is putting more money into repairing roads, something he said rural residents have asked for.
“As a general rule, the rural people would support the upgrades,” he said.
The proposed levy for property in cities is $6.74 per $1,000 of taxable value, down slightly from $6.75 this year.
But homeowners would still pay more in taxes next fiscal year because the rollback, which is the percentage of a residential property subject to taxation, increases two percentage points next fiscal year to 52.8 percent. The state sets the rollback rate.
Under the proposed budget, the owners of a $100,000 home in rural Johnson County would pay $532.45 in county taxes next fiscal year, up $38.63 from this year. Homeowners in cities would pay $355.88, an increase of $22.75 in Iowa City and $25.16 in other cities.
Owners of $100,000 worth of rural agricultural land would pay $40.24 more next fiscal year, while a $100,000 rural agricultural building would increase $38.10. Industrial properties are one of the few classifications that would see a decrease.
The county’s debt service fund would increase 166 percent under the budget proposal. But supervisors Chairwoman Janelle Rettig said that’s being done for the benefit of taxpayers.
The county is going to borrow money by bonding for more road and bridge projects and whatever insurance and technology expenses it legally can.
This move is aimed at tax increment financing, a economic development tool used by local governments that has gained increased notoriety, and criticism, since Coralville used it to bring a Von Maur department store to town.
Under TIF, the new property taxes, or increment, generated by a development go back to that project for a certain period of time rather than to tax-collecting bodies like a school district, city and county.
But local governments can collect debt levies, used to pay off bonds, on the increment.
More than $4.5 million will be diverted from Johnson County this fiscal year by TIF projects, and the total is $22.2 million for all tax-collecting bodies in the county, according to the Johnson County Auditor’s Office.
Rettig said with interest rates so low, bonding is a better financial deal than paying cash because it gets access to TIF districts. More than $739 million worth of taxable property is in a TIF district in the county.
For things like insurance and technology, the county will borrow money for as short a period as possible, Rettig said.
“Bonding to offset the damages to TIF is not entirely new, but it’s something we felt like we had to do,” she said.
While TIF use is criticized by some people as unnecessary tax breaks for developers, supporters say many projects would not get done without TIF and those properties would not increase in value.