IOWA CITY – Most Johnson County property owners would pay more in county taxes under a budget being considered for next fiscal year.
The county’s Board of Supervisors also plans to continue an unconventional practice of borrowing money to partially offset losses to tax increment financing districts – a move that that county officials say is fairer to all taxpayers.
The supervisors will hold a public hearing at 6 p.m. Feb. 25 on the budget proposal for fiscal year 2015, which starts July 1.
The tax levy for property in unincorporated areas would be $10.15 per $1,000 of taxable value, an increase from the current $10.08.
The levy in cities would be $6.74 per $1,000 of taxable value, which is about half a cent more than this year.
The owners of a $100,000 home in rural Johnson County would pay $552.11 in county taxes next fiscal year, up $11.03 from this year. Homeowners in cities would pay $366.75, an increase of $15.21 in Iowa City and $16.14 in other cities.
The rollback on residential property, which is the percentage of a home’s value that is taxed and is set by the state, increases July 1 and contributes to the increase in taxes to be paid by homeowners.
Owners of $100,000 worth of rural agricultural land would pay $8.46 more next fiscal year, while a $100,000 rural agricultural building would see the same increase.
The budget calls for $97.7 million in spending, up 11 percent from the current estimate for this year. Most of that increase is in capital projects and debt service for borrowed cash.
The capital projects increase comes in part from moving to next year some construction work that was budgeted for this year, said Dana Aschenbrenner, the county’s finance administrator.
The county would borrow $14 million next year under the budget proposal, an increase from $9.9 million last year. Of next year’s total, $6.8 million would be for insurance and about $600,000 for technology expenses, Aschenbrenner said.
County governments in Iowa typically do not borrow for insurance and technology costs. But Johnson County started doing that this year because, by issuing bonds, it can get money out of tax increment financing districts.
Under a TIF deal, 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.
Local governments, however, can collect debt levies, used to pay off bonds, on the increment.
There is $838.7 million worth of property in Johnson County in TIF districts, according to the Johnson County Auditor’s Office. The county is losing out on $4.3 million in tax revenue this year because of TIF agreements.
Johnson County’s supervisors have been harsh critics of cities’ uses of TIF, saying they hurt the county and area school districts’ budgets and taxpayers.
“What the bonding is doing is actually lowering the level (of taxes) for the overall county residents,” Supervisor Pat Harney said.
The valuable Coral Ridge Mall TIF district expires in fiscal 2019, and Aschenbrenner said the extra borrowing may continue at least until then.
“As long as there’s such a large amount of our county value that’s basically protected in those TIF districts, it will probably make sense for us to continue to do that,” he said.