Property tax formula error by state means a $400K hit to Mason City’s FY2024 budget (AUDIO)
MASON CITY — City officials in Mason City are putting the final touches on the Fiscal Year 2024 budget, but just like other cities and counties in the state, they are dealing with an error in the formula that determines some property tax rates.
Each year, the Iowa Department of Revenue makes a statewide calculation that affects property tax rates and the error is connected to what’s called multi-residential property. A 2021 law failed to adjust the statewide formula used to determine how much cities, counties and schools can collect in property taxes. The error means local governments are getting less than expected from residential property taxes.
Mason City’s city administrator Aaron Burnett says the error means the city will be getting $400,000 less than anticipated. He tells KGLO News that cities and counties have been left out of the conversation about property taxes. “It has been an incredible source of frustration, the approach that the legislature has taken with these issues. Unfortunately, local government has not been a party or a partner in resolving issues or even being at the table. I think a perfect example of that is the fact that the legislature elected to not take action when they were notified back in October of that to even communicate the issue to anyone with local government.”
Burnett says the legislature’s inaction has had a major impact on city and county governments. “The Legislative Services Agency provided this notification and wrote a memo on this back in October or November, and now we’re sitting here more than halfway (through the budget process)…most of these have already posted their levies and the legislature has decided to simply say ‘we’ll give you two more weeks to work on your budgets now that we’ve taken…’, for Mason City, it’s about a $400,000 bite out of the budget that we were not notified about until basically last week.”
Burnett says it’s hard to budget when you get that kind of wild card thrown at you at the last minute. “I think a lot of local governments are just going to have to absorb the hit into their bottom line, which is a compounding hit based off of roads, fund balances, and those fund balances are important to the financial stability of each one of these local governments. It’s what we bond off of. We pay close attention to those things.”
Burnett hopes the legislature in the future will have better communication with cities and counties. “It’s really frustrating, because we’ve watched time and time again the state legislature just elect to make changes to property taxes that I don’t even think that they fully understand, and frankly, they create uncertainty for local governments, and then they wonder why local governments just can’t do this or can’t do that. Frankly, we need to be in the room early and we need to be part of these conversations rather than just downstream and communicated at the 11th hour.”
Burnett made his comments on the “Ask the Mayor” program earlier today on AM-1300 KGLO. Listen back to the program below