Cedar Rapids to see biggest street repair effort 'in city history'

Council members enthusiastically embrace new budget

Rick Smith
Published: January 31 2014 | 9:32 am - Updated: 29 March 2014 | 2:56 am in

Yes, it sounded syrupy and self-congratulatory.

But nearly to a person, the nine-member Cedar Rapids City Council said Thursday night that City Hall had reason to crow as it has made it through the city’s 2008 flood disaster all the while managing to keep the city’s tax levy the same for six years in a row, its cash reserves strong and its top AAA bond rating in place.

"Absolutely incredible," said one of two new council members, Ralph Russell.

"Amazing," said council member Justin Shields, who added that Cedar Rapids continues to have the lowest tax levy rate among Iowa’s eight largest cities, except Dubuque, which has gaming revenue to help balance its budget, he said.

Council member Kris Gulick called the proposed city budget for the fiscal year that begins July 1, "magic."

The magic, he said, has included the city's move to diversify its income with revenue from a 2-percent franchise fee on gas and electric bills and the 1-percent local-option sales tax to fix streets.

City Manager Jeff Pomeranz last night presented his proposed budget to the council for fiscal year 2015, and council members embraced it without suggestions for change.

The $112.7 million general fund budget, up from $110 million in the current year, will reduce property taxes to the city’s commercial and industrial properties by 5 percent while raising the city’s portion of the local property-tax bill on residential properties by 2.99 percent.

Both percent changes are driven by changes made by the state. In the new budget, only 95 percent of the value of commercial and industrial property will be subject to property taxes, down from 100 percent, while the percent of value of residential property subject to tax will increase 2.99 percent from 52.8166 percent of value to 54.4002 percent of value.

The owner of a $150,000 home will pay $36 more, while the owner of a $1 million commercial or industrial property will pay $761 less.

Additional revenue from residential property is helping the city keep its levy rate at $15.22 per $1,000 of value for the sixth straight year, notably lower than six of the other seven largest cities in Iowa.

"We’re not trying to be the cheapest, but we’re trying to be the best," Mayor Ron Corbett said.

Pomeranz called the new budget "fiscally responsible and progressive" and "business as usual as we move forward."

The budget includes a 2 percent wage increase for employees and keep nearly the same number of employees, about 1,200 full-time employees, as in the current budget year.

Corbett said the biggest feature of the new budget is the amount of street repair work the city plans to do, thanks to the infusion of $18 million in new annual revenue for streets from the city’s renewal of the 1-percent local-option sales tax.

The city will spend $35.3 million in the new budget on street improvements compared to $20.5 million in the current budget year and $11.3 million in the budget the year before that. In total, the city will spend $41.9 million on street, storm sewer, bridge, traffic signal and trail improvements, up from $24.6 million in the current year and $19.4 million the year before that.

"The priority of fixing streets is front and center in this budget," Corbett said. "Never in the history of the city have we taken on this kind of ambitious infrastructure program."

Pomeranz  said the budget also includes a new fund into which revenue from the city's "monumental" award of $264 million over 20 years from the state will go for flood protection.

"That's not just something to talk about or hope for. Those are real dollars," he said.

Several council members pointed to the millions of dollars in new initiatives recommended by the city’s department heads that didn’t make their way into the final budget.

Pomeranz said the city already is benefiting from the voters’ approval of the renewed local-option sales tax and it also is receiving more tax revenue from residential property owners because of the state valuation formula. As a result, he didn’t want to recommend increasing the tax levy rate, which the council can lower, at the same time, he said.

Council member Scott Olson asked Pomeranz and Finance Director Casey Drew to provide the council with a clear picture of when properties with tax breaks stop getting the tax breaks and come back on the tax rolls.

The City Council has been aggressive in using incentives, and in the new budget, $13.9 million in potential property tax revenue is being diverted into an incentive called tax increment financing (TIF), up $2.7 million from the current budget year.

Council member Gulick quizzed Pomeranz on the prospects that the city may lose some of its $3 million in net revenue from traffic enforcement cameras as the state of Iowa scrutinizes the camera use.

"Safety will be important to prove, and we will do that," Pomeranz said. "We’re not going to throw in the towel. … It’s about safety, and that’s going to be our argument."

At the top of the list of new initiatives that Pomeranz noted but recommended against funding was a new, $1-million-a-year Police Community Action Team, which would have added seven employees that would be deployed into areas with identified crime problems.

"I appreciate being at the top of the list," Police Chief Wayne Jerman said at last night’s budget meeting. "I’m a team player. I’m just one department. I understand the financial pressures the city faces."

The city may use $100,000 from the sale of city-owned property to partially fund a Parks and Recreation Department request to provide higher quality maintenance for the amphitheater, other park spaces in the downtown and the Cedar River Trail.

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