While talking to people in town I get asked "Why can't we just raise taxes if the city budget is tight?"The largest portion of the city’s revenue comes from property taxes. In Iowa, property tax is to be used only by government entities: schools, cities, counties. Local assessments can also be made for hospitals, and taxing districts (water districts, fire districts, recreational lake districts, to name a few) can be formed to collect taxes that pay for the provided service.
Government entities are permitted by state statute to impose a tax on real estate. Residential and commercial real estate includes land and buildings.
A city is permitted to impose a property tax levy rate for its general fund not to exceed $8.10 per $1000 of assessed value. Other supplemental levies are also permitted and the rates are specified by Iowa Code section 384.12.¹
Some levies must be authorized by ballot. An example of this in University Heights is the library levy.
A city can only impose those permissible levies to which it is entitled. In University Heights these levies include the regular general levy ($8.10) and supplemental levies for transit, insurance, emergency levy, FICA and IPERS, and employee benefits. I sometimes call these supplemental levies “stealth levies” because the city is able to impose them without voter approval.
Until as recently as ten years ago, University Heights was able to meet its obligations using only the regular general levy ($8.10). Today the regular general levy and every one of the supplemental levies that the city is qualified to receive are imposed.
This is why the city can’t “just raise taxes” when more money is needed. We simply do not have the authority to assess any additional levies.
Here is our city's budget sheet with notes that I've added to it. Click on the yellow boxes to find out more:
For further information about property tax in Iowa, see the “Legislative Guide to Local Property Tax”
Additional information can be found at the Iowa Auditors website.
