SULLIVAN'S SALVOS
October 15, 2011
Sullivan’s Salvos 10/18/11
In this edition:
*Homecoming Week
*Budget Preview
*Occupy Iowa City, Part 2
*Did You Know?
*Homecoming Week
It is Homecoming Week at the University of Iowa. I am a very sentimental guy… probably too sentimental! With that in mind, you can understand why I love Homecoming!
I hope you all get an opportunity to take in some of the pomp and circumstance surrounding the big game!
*Budget Preview
Johnson County will be starting the FY13 budgeting process very soon. Before we begin, I want to set the stage.
The FY12 budget was about $74,000,000. Only about 60% of that comes from property taxes – the rest is a mixture of federal and state dollars, grants, fees, fines, etc.
Despite chatter to the contrary, property taxes levied by Johnson County are low by Iowa standards, ranking 58th out of 99 counties in FY12.
What does FY13 hold? There are two sides to the balance sheet. On the expense side, things should be pretty quiet. There is only one major new expenditure looming right now. Fall of 2012 will likely see a vote on a new Justice Center, but even if it passes, that money would not be collected until FY14.
The County does have 6 union contracts open – it remains to be seen what type of settlement can be reached there. For the purposes of illustration, a 1% increase in wages for all County employees (not just union employees) results in an expenditure of approximately $200,000.
There may be some cuts – a position here and there, less staff training and education, stretching out replacement schedules, some minor program cuts. Having gone through EVERY SINGLE LINE of the County budget the past few years, I do not believe there is much “fat” to be trimmed. Any deeper cuts will have significant impacts on service.
The real question marks surround revenues. I see this breaking down into four main items of concern:
First, the residential rollback. Because Ag and Residential property are tied together, the rollback will actually go up again this year. (Due to incredible Ag productivity, the rollback went up last year for the first time in recent memory.)
This means residential taxpayers will pay on 48% of their value as opposed to 47%. (I’m estimating those numbers, but they are close.) So residential property owners will pay slightly more (likely about 1%) even if local governments keep the levy rates the same.
Second, growth in taxable valuation. This used to be the bread and butter of our local governments. While many places in Iowa lost valuation, local governments in Johnson County could count on a steady 5-9% annual growth.
Not anymore. While we still see some growth, it is much more modest – more like 1%. In addition, much of the growth has taken place in TIF Districts, meaning Johnson County gets ZERO tax dollars from the increment.
Third, apartments converting to co-ops. You may recall that I wrote about this in Salvos a couple weeks ago. Because of a recent Iowa Supreme Court ruling, several local apartment units will be converting to co-ops, thus cutting the taxes they owe in half.
While it is still uncertain exactly how much this might cost Johnson County in revenue, it will likely be at least $500,000 for FY13. (And no, Bob Elliott – rents will NOT go down as a result!)
Fourth, Governor Branstad and the Iowa Legislature. This is the single most important factor, and also the most difficult to predict. Governor Branstad has spoken of 60, 40, and 25% cuts to commercial property taxes. Any of these proposals would be devastating to local governments.
The State claims that they will “backfill” any lost property tax revenue, but that is bull puckey. The State has broken financial promises over and over again. (MH/DS and Homestead Tax Credits, just to name two.) I have ZERO confidence that the State will help local governments.
Where does this leave us? The tiny bit of growth coupled with the rollback should offset the conversion to co-ops. Johnson County should see no big changes unless the Legislature decides to play God with local governments. If so, all bets are off.
So, what are your thoughts regarding the FY13 budget? Please let me know!
*Occupy Iowa City, Part 2
A couple of weeks ago, I mentioned that I had made a couple visits to the Occupy Iowa City campsite in College Green Park. I am a real fan of this grassroots movement.
As you know, Occupy Iowa City is mainly a show of solidarity with the folks who are occupying Wall Street. The excesses of Wall Street took us to the brink of financial collapse once, and they are headed that way again. The people of the world NEED the US government to step up. But our government is not functioning. People take to the streets when they cannot get action any other way.
The two political parties are badly broken. The national GOP is committed to protecting the wealthiest 1% of the population, everyone else be damned. Despite a purported love for Jesus, this party has become ignorant, cruel, heartless, and brutal. The national Democratic Party is simply inept, walking on eggshells. It reminds me of an insecure 14 year old, worried first and foremost about what others think.
I think the protesters have the right idea. Take to the streets. It can’t hurt!
*DID YOU KNOW? Commercial tax valuation in Johnson County is over $2.5 billion, a 22% increase from 2007 to 2011.
Anyone interested in learning more about County government should take a look at the County website-
www.johnson-county.com.
"Sullivan’s Salvos" is sent once per week to any interested party. It will give a brief update on issues of interest to Johnson County residents.
These messages come solely from Rod Sullivan, and neither represents the viewpoints of the whole Board of Supervisors nor those of groups or individuals otherwise mentioned.
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As always, feel free to contact me at 354-7199 or rodsullivan@mchsi.com. I look forward to serving you!
---Rod
posted by Rod Sullivan @ 9:45 AM
1 Comments:
Rod,
Thanks for the budget breakdown. One of the reasons I like you is that you're a raging liberal who still goes through the budget with a fine-tooth comb and takes the responsibility of governance seriously.
Question on the rollback figure: I'm missing something. Why does the valuation rate go UP when farmers make more money? As farmland value skyrockets, I'd think government could get by levying on a lower percentage of that value, not higher. Or are those hikes in farmland market values not yet reflected in the assessment values? (I understand that agricultural and residential property are tied together, though why they are is a separate question.)
Also, a counterargument to the apartment/co-op conversions. I wouldn't expect the drop in taxes to result in a short-term drop in rents.
I've got one small house in Cedar Rapids I rent out. My valuation went up this year, so my taxes went from about $110 to $125 per month. I probably wouldn't raise the rent on my current tenants unless that figure jumped up by $50 or so.
On the other hand, if my property taxes got cut in half you're right that I'm much more likely to pocket that savings rather than pass it on to the tenants. But when it comes time to renew the lease or find new tenants, I may find that I need to lower my rent $50 to stay competitive.
So maybe there won't be an immediate drop in rents, but I'd expect long-term trends to show one. I guess we'll see.
-- Steve Groenewold
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