By Eric Harrold
Fiscal year 2025, which begins on July 1, will see a decrease in available county funding of more than $250,000 for O’Brien County, due to impacts of House File 718.
O’Brien County recently received a levy calculation from the Department of Management, informing that the county can expect to lose $153,185 from the General Basic Fund, and $101,497 from the Rural Basic Fund.
The losses are the result of an increase in taxable growth of 8 percent in the county in the previous fiscal year in the calculation for the General Basic Fund, and 7 percent taxable growth for the Rural Basic Fund.
Any taxable growth above 3 percent means that counties like O’Brien will not receive the maximum funding rate applied to FY 2024 budget data. For FY 2025, O’Brien County will limited to a maximum levy of $3.39806 per thousand dollars of taxable valuation for the General Basic Fund instead of the former state approved maximum of $3.50 it saw the previous fiscal years.
Similarly, the Rural Basic Fund will see a levy decrease from $2.96536 per thousand dollars of taxable valuation in FY 2024 to $2.87899 in FY 2025, resulting in $101,497 less than the year before. The state limited both the taxable value of property and the levy in Iowa’s 99 counties.
Many would look at the numbers and conclude that the changes are negligible and that the county should be able to absorb the decrease in revenue by tightening its spending bootstraps and exhibiting a little fiscal responsibility.
The problem is that the county is tasked with accounting for future inflation rates as well as meeting the demands created by growth beyond the limits set by the new legislation. Road maintenance and law enforcement resources are two examples of costs that invariably increase with new growth.
O’Brien County supervisors argue that the county is being penalized for the growth that occurs under the new formula created by HF 718.
The legislation, which passed with nearly unanimous support, was intended to provide property tax relief after soaring property valuations in response to rising construction costs seen at the onset of the coronavirus pandemic led to tax increases for many owners across the state.
“I’ve sat here for nearly 40 years, and I’ve yet to see a county supervisor who want to raise taxes,” said County Auditor Barb Rowher, who went on to point out that the counties are also tasked with absorbing assessment decreases due to homesteading and military exemptions.
The state already has tools available to address assessments not fair to both property owner and County. Rowher said that if valuations do not reflect real market cost, the Iowa Department of Revenue can send out an equalization order for each class of property that it determines has not been assessed at its market value.
The challenge presented to the county doesn’t end there. Language in HF 718, also requires that the it bear the cost of mailing ballot language for any bond issue to all registered voters in the affected jurisdictions. If there are multiple registered voters in the same household living at the same address, each are required to be sent a mailing.
Rohwer gave the Sheldon High School renovation project as an example. Altogether, $2,882.77 was spent with over $2,000 for postage alone, with the remaining amount spent on card stock and satellite voting.
Similarly, property tax hearing notices must be mailed to each taxpayer in March, according to Rohwer, who estimated the cost of those mailings to be around $6500.