Increase in total property tax levy will fund Iowa City employee minimum wage

By using a maximum property tax levy, Iowa City is set to implement a minimum wage of $15 an hour for all city employees, including temporary and seasonal.


Katie Goodale

Downtown Iowa City is seen on Feb. 4, 2021

Claire Benson, News Reporter

Iowa City’s maximum property tax base will increase for fiscal 2022, funding an increase in the minimum wage of city employees.

The minimum wage for city employees will increase to $15 an hour, effective in July of this year.

City Finance Director Dennis Bockenstedt said that, with Iowa City expanding and growing, property values have gone up and increased the tax base.

He said increasing the minimum wage for city employees from $13.25 to $15 is a relatively low percentage, but when applied to the thousands of hours worked by the city’s temporary and seasonal workers, it adds up to be quite the cost.

Despite the raise of the maximum property tax levy, Bockenstedt said the tax rate is actually going down by 10 cents, from $15.77 to $15.67.

According to the publication SFGATE, a tax levy sets a percentage rate for imposing taxes, which is then calculated against the assessed value of each homeowner’s property according to its value.

With the maximum property tax levy, the city is looking to collect as much funding in property taxes as possible to redistribute to the city’s budget and fund public services.

Bockenstedt said the levy serves to inform Iowa City residents about how these additional dollars are being used within the city’s budget.

“The property values went up, and even though we lowered our rate, the actual dollars we were collecting still went up,” Bockenstedt said. “That’s kind of what that tax levy identifies — that we lowered our tax rate, but we’re still collecting more taxes, and that’s what they want people to be aware of.”

Bockenstedt said the Iowa City City Council is responsible for recognizing and setting priorities as to how the city spends its funding — within the past three years, the council has made it a priority to raise city employees’ minimum wage to $15 an hour.

“The council set this as their goal several years ago so it would be phased in over three years to kind of mitigate the big impact,” Assistant to the City Manager Rachel Kilburg said. “They felt that it was a big priority for them; something that was important for them to have the city employees be earning a livable wage in the community.”

This recent push by city officials to set the minimum wage for city employees at $15 comes as some Democrats in Congress are pushing for a $15 minimum wage nationwide. Johnson County used to set its own minimum wage until a law passed in Des Moines took away the power for local municipalities to set a minimum wage that is different from the state’s $7.25. Then, more than 100 area businesses joined a pledge to pay workers a minimum of $10.10 an hour, a symbolic minimum wage that has continued to increase.

Kilburg said she believes the city council is following this national push for $15 an hour minimum wage to be a driving force within the local, state, and national community, and wants other governments and businesses to follow in their footsteps.

“I think obviously businesses are facing a little more stress than usual, due to COVID-19,” Kilburg said. “But, as these conditions stabilize and we’re continuing to have this priority placed on social justice and racial equity, then the hope is that other local businesses in the community can kind of see what City Council has done and use that as a model to implement it in their own businesses when they’re in a position to do so.”

City Councilor Laura Bergus said by raising the minimum wage by utilizing increased tax dollars, the City Council wants to show that city employees are valued and important workers, and that they are being treated fairly and compensated with a livable wage and necessary benefits.

“Even though the state of Iowa has prohibited us from mandating increases in the minimum wage and also has prohibited Johnson County from doing that, we want to kind of lead by example,” Bergus said. “It’s one of many ways in which we show our values through our expenditures of public funds.”