Linn supervisors set for nice tax break for rural property owners

$518,950 in revenue estimated to be lost due to TIF incentives

Rick Smith
Published: January 20 2014 | 4:23 pm - Updated: 29 March 2014 | 2:25 am in

The Linn County Board of Supervisors is moving quickly to pass its next budget, which will feature a nice property-tax cut for rural residents and which is providing supervisors a chance to grumble about money their budget loses to city economic-development incentives.

The tax break for rural residents in unincorporated Linn County is coming because of the supervisors’ decision to direct 25 percent of its revenue from the 1-percent local-option sales tax directly to rural property-tax relief.

In March 2012, voters in unincorporated Linn County extended the sales tax for their rural jurisdiction for 10 years with the 25-percent property-tax cut to take effect on July 1, 2014.

Rural Linn County residents outside of cities currently pay $9.826 per $1,000 of valuation to support Linn County government — which includes support for secondary roads and access to city libraries — while those who live in cities pay less, $6.11 per $1,000 of valuation for county services, because they pay their city governments for city services.

All residents also pay property taxes to the school district in which they live.

In the budget year beginning July 1, the rural residents will see an estimated 93 cent per $1,000 valuation cut from their property-tax bill, with the $1.3 million reduction in property-tax revenue being replaced by a like amount of revenue from the local-option sales tax, Dawn Jindrich, the county’s budget director, estimated at the board’s budget meeting on Monday afternoon.

"It’s a big deal," Supervisor Linda Langston said of the property-tax break for rural residents.

At the same time at their Monday budget session, the supervisors said they may increase the current levy rate by a few cents for property owners in cities and outside of cities so that the supervisors can grant a few new requests from their department heads.

Supervisor Brent Oleson said the county’s basic tax levy stood at $6.15 per $1,000 valuation for all property owners before the flood of 2008, and it now sits four cents per $1,000 below that amount.

In the end, budget director Jindrich said residential property owners in cities in the county will see the county portion of their property-tax bills increase a few percent while commercial and industrial property owners will see a decrease because of actions taken by the state of Iowa related to the percent of property subject to property taxes.

For city residents in Linn County, the county piece of the local property-tax bite is about 16 percent of the total, while it represents about 33 percent of the bite for rural residents, Jindrich estimated.

The supervisors estimate that they will lose $518,950 in revenue in the upcoming budget year due to cities’ economic-development tax breaks known as tax increment financing. That’s up from a loss of $389,459 in the current budget year, according to the county’s estimates.

Oleson said a loss of revenue for the county’s budget is "collateral damage" when cities in the Cedar Rapids metro area get into a "TIF war" as they compete to attract and keep businesses with TIF incentives.

The supervisors said they are premising their next budget on a wage increase for union and non-union employees of 2.25 percent. However, they called this percentage a "placeholder," which could change. The county currently is in arbitration with one of its three bargaining units, the Public Professional and Maintenance Employees union, which represents sheriff’s deputies, Langston said.

Oleson said he wants the supervisors to look at fund a county engineering and actuarial study to see if the county should build flood protection on May’s Island, home to the Linn County Courthouse and Linn County Jail.

Both county buildings, along with the city’s Veterans Memorial Building on May’s Island, were among the flood victims in the 2008 flood.

Protection of May’s Island isn’t included in the city’s flood protection plan unless the city has a surplus of funds.

Oleson, Langston and Lu Barron, chairwoman of the Linn board, said an actuarial study may conclude that the county should invest in insurance and not flood protection for the island.

The supervisors will vote on the new levy rate and expected wage increases at their Wednesday meeting.

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