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Property tax proposal could cost city, school districts $8 million first year

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By Lauris Olson

(March 28, 2011 – 10:45 a.m.)  Commercial and industrial property tax rates shouldn’t be lowered unless the state is willing and able to make up the difference to local governments and school districts, according to three Ames-area legislators.

“I have said for years that the inequities in the tax system between commercial, residential and agriculture can restrict growth,” state senator Herman Quirmbach said Friday.

“With the rollbacks making commercial and industrial property owners paying twice the rate of residential property owners and three times more than agricultural, sometimes there is little incentive to convert agricultural or residential property into job producing, income producing, properties.”

Quirmbach and state house representatives Beth Wessel-Kroeschell and Lisa Heddens, spoke at an Ames Chamber of Commerce legislative forum.  Moderator Jolene Randall said representative Dave Deyoe was ill and state senator Rob Bacon, although expected, did not appear. Deyoe, from Nevada, and Bacon, from Maxwell, are Republican.

Gov. Terry Branstad has proposed rolling back (reducing) the percentage of the property’s assessment value subject to local governments’ milage (taxing) rates. The state would compensate local governments for up to 50 percent of the lost revenues for the first year, gradually eliminating the subsidy by the sixth year. Bills on the proposal have been introduced in both houses.

The three local Democratic legislators told chamber of commerce members that the state should compensate cities, counties and school districts for every dollar lost by rollbacks on commercial and industrial property valuations.

“You will be impacting some of the most essential and popular programs offers at the local level,” said Wessel-Kroeschell. “There would be less money for police and fire protection, for street maintenance and for libraries, just to name a few.”

The City of Ames has 1,387 commerical and industrial properties assessed at $991 million, according to the city assessor's website. At a milage rate of .3263, the properties will generate over $32 million in income this year.

Under the Branstad proposal, the city and the Ames and Gilbert school districts would lose almost $8 million combined in revenue the first year and at least $16 million in year six, assuming assessed values stay steady or increase.

The legislators were more upbeat about the new revenue estimates issued Friday by the state’s revenue estimating committee.

The committee increased the state’s estimated general fund revenues for this year by $48.6 million over their November 2010 estimate and projected that the revenues for the fiscal year beginning July 1 would be another $38 million higher over this year’s new estimate.

“The two numbers together will pay for us to allow a 2 percent allowable growth rate for our school districts and continue full funding for all 4-year-olds to receive free preschool,” said Quirmbach.

While the revenue estimating conference delivered good news Friday, the three cautioned both those attending the forum for Ames chamber members and those who attended a Saturday morning forum for the public that the legislator has done little work on economic development.

The Saturday forum was hosted by the Ames League of Women Voters. Deyoe was still ill. Bacon did not respond to the League's invitation.

“I sit on the economic growth committee in the house,” said Wessel-Kroeschell. “I have not seen a bill yet. Now maybe they are in other committees or in sub-committees right now, but I haven’t seen one yet.”

Heddens and Wessel-Kroeschell pointed out that the House agenda for this week included reproductive rights, nuclear power and guns.

“We were supposed to address an economic bill this week,” Heddens said. “but we put it aside so that we could debate a bill that started as a raccoon hunting bill turned into a dove hunting bill.  I heard there was supposed to be a job creation bill debated Monday, but I looked at the agenda and it is not there.

“Our next funnel date is Friday, April 1. We are supposed to be finished the end of April, but I don’t see that happening… I am concerned that the budget bills will get tied up in gridlock in conference committees or that legislators will be so tired that they will just say ‘let’s pass it’ and we won’t have done our due diligence.”


That means the city and school will need to cut expenses drastically because I do not support a property tax increase (its too high already).

Quote (in part) from Senator

Quote (in part) from Senator Q: " . . . sometimes there is little incentive to convert agricultural or residential property into job producing, income producing, properties.”

I do not understand this. We have already lost so much prime agricultural land to sprawl in Story County. Development for development's sake is not the answer.

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