County budgeting begins new legal guideline

Traditionally, after the holidays Union County Board of Supervisors begins additional research for the next fiscal year budget which begins July 1.

This season won’t be any different, except for a new state ruling that does not go into full effect until 2029. But what happens with fiscal year 2025 may start the link with ensuing years.

Signed earlier this year by Gov. Kim Reynolds, state legislation caps levy rates for cities and counties. Cities will have a general fund levy, consolidated from 15 existing levies, capped at $8.10 per $1,000 in taxable value. Counties have a cap of $3.50 per $1,000 for general services and $3.95 for rural services.

Local governments are placed into three tiers based on their revenue growth with different formulas to determine how much of the excess revenue must be dedicated to lowering property taxes, and the process for bringing existing property tax rates down to those set maximums.

These caps — as well as the new $6,500 homestead property tax exemption for Iowa seniors and $8,000 exemption for veterans — will mean Iowans pay a smaller share on the assessed value of their homes, farms or businesses in future years. As Iowa homeowners saw a 22% average growth in home value assessments this year, these measures will mean larger reductions in costs for taxpayers.

“We are not part of what is called the dirty 30,” said Union County Supervisor Rick Friday. There are 30 counties above the mandated cap set by the legislation. Union County is already at the $3.50 for general and is at $3.70 for rural.

Although Union County is not exceeding the mandated amounts, county officials are aware how a combination of rising property valuations and annual expenses may threaten those limits.

“We compare the formula for revenue from last year and this year and we can only go 3% above that,” said County Auditor Sandy Hysell. “It depends on growth.”

Should something happen that forces the levies to go higher than the 3% growth, counties are to have an election asking its voters if it can go higher. Explanations of why the increase for the voters is required.

“It can change every year because of your growth, but you have to stay under the $3.50,” Hysell said about how a county’s budget can fluctuate yearly.

Property owners will be notified of the city’s, school district’s and county’s levy via a mailing from the county. Hysell hopes all those amounts will be known by early March for the mailing. For example, a person who owns land in the East Union School district and Creston School District will receive two mailings with each one stating its respective levy amounts.

The cost for mailings have not been budgeted.

Friday said this legislation will make some significant changes for some counties. Counties with debt, like for a new jail including a related tax increase, is not included in the legislation since that is considered a county’s debt service.

“Some counties are at $4.50. They have not had the growth or revenue so they increase their levy to pay off their expenses,” Friday said. Counties above the maximum amounts have been suggested to incrementally lower the amount until 2029.

“Try and bring it down each year,” Hysell said. “Stair step so it doesn’t hurt so bad.”

Friday said he knows of one county that will have to reduce $1.2 million. Another county is $460,000 over.

Hysell said some counties, like Dallas, have consistent growth patterns. “Down here with us, Adams, Taylor Ringgold, we don’t have that with our valuations.”

Friday said the legislation appears to restrict growth, “but we need growth in the county.”

Hysell did not want to speculate how the new guidelines will impact Union County. All county department heads are aware of the ruling.

“It’s too early to tell. I will not say the sky is falling. We are just going to have to be careful with budgeting. We may have to look further at non-mandated services. The costs for counties do go up. You can’t keep public service to 15 people if you need these new houses and people moving in,” she said referring to places like Dallas County. “You put your guys thin, so you hire another 13 officers. Where does the money come from?”

Iowa Capital Dispatch contributed to this story