The governor and Legislature continue to address the inequity between commercial and residential property taxes, and we applaud them for their efforts. This is a difficult job that has been attempted many times, and to navigate the political and policy minefields is no easy task.
Iowa didn’t develop this system overnight. It has been tweaked and amended several times over the last three decades, and it is a system that could use reform. We support reforms that will help us continue to grow and encourage economic development in our urban centers.
The cities of the Metropolitan Coalition, an association of the 10 largest cities in the state, have made budget cuts, frozen staff levels, and reorganized city government to operate leaner and more efficiently in the last few years. Our cities are running extremely efficiently, and we continually look for ways to stretch the tax dollars we collect.
Cedar Rapids has cut nearly $30 million from its budget over 10 years, and Des Moines has cut $28 million over seven years. The cuts mean efficiencies and reorganizations, but they can also mean loss of jobs and services to our citizens. Over the last 12 years, Sioux City has cut 112 employees — a 12 percent reduction overall — and Des Moines’ cuts will result in the elimination of 315 full-time positions since 2002. In addition, cities face the same rising costs of doing business that the private sector experiences: inflation, health care, and other personnel costs, just to name a few.
While we are support efforts to equalize the costs of local government services, we believe most of the current proposals offered will simply shift the property-tax bill from commercial property owners to homeowners.
The heart of the matter is how local governments are funded. Currently, local governments are almost entirely dependent on property taxes to provide the services they offer. Because of limited alternative revenue sources for a city, any decrease in property-tax revenue would have a significant detrimental effect on city budgets. Real reform should address this issue and not simply reduce taxes for a single class of taxpayers. Doing this could have the effect of shifting the burden from commercial property owners to the residents of our cities.
The proposals advocated by Gov. Terry Branstad and the Iowa House of Representatives shift the entire tax burden to local governments. This is why we support an approach that more closely resembles the plan passed out of the Iowa Senate last year. A system of income-tax credits that are based on their commercial property tax bills would provide much-needed relief without shifting the burden to local government or other property classes.
The cities of Iowa have reached a critical point when it comes to cuts. Any further reduction in revenue will mean drastic changes to the essential services we provide. First and foremost, we have a duty to provide police and fire protection. This protection is critical in every community and must be protected from further cuts. Yet one of the fastest-growing costs for cities is the pension contributions for our police and fire personnel using a state-mandated formula. State support is critical for the cities’ ability to keep up with pension costs, yet the state has eliminated its support, shifting this burden to the local taxpayer.
We work hard to partner with businesses to find ways to help them grow. More service cuts will end our ability to grow businesses and encourage redevelopment in our urban centers.
We embrace efforts to provide a business climate that promotes growth in our state, but we urge the governor and the Legislature to be mindful not to craft any plan that shifts the tax bill to the homeowners and at the same time results in less service being provided by our cities.
The Mayors of the Metropolitan Coalition is a coalition of Iowa’s 10 largest cities. It consists of the following: Mayor Ann Campbell, Ames; Mayor Ron Corbett, Cedar Rapids; Mayor Tom Hanafan, Council Bluffs; Mayor Bill Gluba, Davenport; Mayor Frank Cownie, Des Moines; Mayor Roy Buol, Dubuque; Mayor Matt Hayek, Iowa City; Mayor Bob Scott, Sioux City; Mayor Buck Clark, Waterloo; Mayor Steve Gaer, West Des Moines.