City will hold tax rate steady

by Marianne Gasaway

The City of Clear Lake intends to hold its tax rate steady for a sixth consecutive year.

The proposed City tax rate for the 2022 Fiscal Year, which begins on July 1, 2021 and ends on June 30, 2022, is proposed to remain unchanged from its current rate of $9.70 per $1,000 of taxable valuation.

“For six consecutive fiscal years now, the City’s share of the tax rate has either declined or remained constant, without an increase,” said City Administrator Scott Flory at Monday night’s City Council meeting.  “For Fiscal Year 2017, the City tax rate decreased from $10.54 to $10.04; for Fiscal Year 2018 the tax rate was decreased from $10.04 to $9.80; and for Fiscal Year 2019 the tax rate was decreased from $9.80 to $9.70.”

The recommended tax rate of $9.70 per $1,000 of taxable valuation would result in a tax bill for City government services of $786 in 2021-22 for a residential property with an assessed valuation of $150,000 (with Homestead Credit).  

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“Consequently, the property tax impact, resulting from the proposed FY22 tax rate would be approximately $19 a year more for a residential property with an assessed valuation of $150,000 in Clear Lake.  This is attributable to the increase by the State in the residential rollback,” explained Flory.

The taxable valuation for the 2022 fiscal year continues the positive trend of growth in the community, according to Flory.

The taxable valuation for FY 2022 is $728,071,665, which is a $33,256,991 increase (4.5 percent) from FY 2021.  

“This is despite a commercial, industrial and multi-family residential rollback,” added Flory.  The residential rollback for FY 2022 is set at 56.41 percent, which is a slight increase from FY 2021’s rate of 55.07 percent.

In reviewing the proposed budget with the City Council, Flory noted total expenditures among various programs are projected at just over $14.9 million, of which $9.7 million is directed to operations and maintenance; $4.5 million toward capital; and roughly $700,000 to debt service.  Projected ending cash balance for June 30, 2022 in the General Fund is $4,970,908, which is roughly 62 percent of the General Fund operating budget.

“The single largest source of revenue for the City is, of course, the property tax,” Flory continued.  “The property tax is based on the value of property owned.  In Fiscal Year 2022, property taxes will represent roughly 40 percent of total revenues.”

Flory noted the City’s Constitutional debt limit for FY22 is $58,387,515 and the City currently has used only 4.8 percent ($2,788,500) of its General Obligation borrowing  capacity, which is also one of the lowest levels of debt in the state.  Generally, municipal finance advisors suggest operating in the 60-70 percent range, he added.

The City of Clear Lake continues to rank among those with the lowest tax rates in the state.  Clear Lake will rank among the five lowest tax rates in the state for cities with a population of greater than 4,000.  Flory called that a huge benefit for those considering locating their business here.

The City Council will hold a public hearing March 1 to adopt the city’s new Maximum Property Tax Dollars resolution which is now required by the State.  The new legislation requires cities to approve the amount of tax dollars for the fiscal year budget prior to approving the final budget.  If those required dollars exceed 102 percent of the dollars collected in the current fiscal year, the vote to approve the resolution must be a two-thirds majority vote.  The City Council is also expected to adopt a preliminary budget and set its public hearing for March 1.  The Finance Officer must certify the budget to the County Auditor by March 25.

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