The Howard County Board of Supervisors adopted a budget during their regular meeting Feb. 26 that will increase property tax askings by $83,557 during the 2008/2009 fiscal year. The increase resulted in part as a result of a decrease in taxable value for property in Howard County over the past year.
    Total property taxes will go up from last year’s askings of $3.28 million to $3.36 million during the 2008/2009 fiscal year, which begins July 1. This is an average annual increase of .79 percent.
    A proposed tax rate per $1,000 of taxable valuation was set at 6.4 percent for urban areas, including the mental health and debt service levies and 10.06 percent for rural areas. Countrywide levies account for $2,422,898 of the total property taxes, rural-only levies account for $940,816, TIF tax revenues for $85,057 and the Utility Replacement Excise Tax accounts for $94,742.
    The General Basic and General Supplemental levies were increased to help cover various increases in expenses, according to Jan McGovern, director of the Board of Supervisors.
    “Only FICA, IPERS, workers’ compensation and tort liability can be funded under the General Supplemental levy. Those four items increased by a total of $13,946 over last year, so the levy needed to increase from [a rate of] 1.45 to 1.53998 to cover that increase,” McGovern said at the February Board meeting.
    The Supervisors increased the General Basic maximum levy from 3.50 percent to 3.79817 percent, resulting in an increase of $71,648 over last year.
    “Over the past two years, 22 counties have requested to increase their General Basic maximum levy from 3.5 to amounts as high as 5.5. This is something counties have needed to do for various reasons,” McGovern said.
    McGovern said one reason the Board decided to raise the levy to a basic property tax rate that exceeds the maximum rate has to do with real estate property valuations. Agricultural land valuation declined by 9.8977 percent, while residential property saw a 1.4793 percent decrease and commercial valuations dropped by .2688 percent.
    “With all of these percentage decreases and very little if any property increase, our overall valuations took a decrease, which affects our tax askings,” reads a notice of public hearing published by the Supervisors.
    “In order to prevent reducing critical services to the residents of Howard County, Iowa, we, the Howard County Board of Supervisors are asking for $115,982 more in tax dollars than what would normally be allowable to prevent the reducing of services,” continued the letter.
       McGovern clarified that only $75,000 of the $115,982 will be generated from property tax. The majority remaining, $40,000, comes from a utility replacement tax levied on electrical and natural gas usage.
    “We knew budget time would be a challenge this year when the state informed all counties that the taxes collected for next year on agricultural property would be limited to 90.1023 percent of the assessed value,” McGovern said at a recent Board of Supervisors meeting.
    McGovern explained that agricultural property is assessed according to a rolling five-year productivity value, not market value.
    “Then the Iowa Department of Revenue informed us on Jan. 29 that our total taxable valuation had decreased 3.68 percent from $407 million to $392 million from Jan. 1, 2006 to Jan. 1, 2007,” McGovern said.
    This valuation is used to determine taxes collected for the fiscal year 2008-2009.
    The Rural Services levy, paid for by rural property owners, increased 17 cents from 3.48 to 3.65509 percent, but because of valuation decreases, tax askings will decrease from $942,853 to $940,816.
Behind the Valuation Decrease and Why Some Farmers May be Happy
    A report released Jan. 26 by the Iowa Department of Revenue revealed a 3.68 percent decrease in taxable value for property in Howard County. The valuation fell from $407,831,824 to $392,843,476 from Jan. 1, 2006 to Jan. 1, 2007, according to the report.
    Howard County is one of only two Iowa counties (the other is Jasper) to see a decline in taxable property value during this time period.
    The report was brought to the attention of the Howard County Board of Supervisors at a February meeting. Board Director Jan McGovern said the data can appear alarming at first look.
    “The percentages shouldn’t be as alarming as they might seem to be,” McGovern said.
    County Assessor Tom Mullen said the 2007 Assessment Limitations Order, a rollback, is the biggest culprit in the property valuation decrease. The rollback has been issued yearly since 1978 by the Iowa Department of Revenue, and must be applied to assessed values of agricultural, residential, commercial, industrial, railroad and utility property when computing taxable values for property taxes.
    These adjustments exist in order to comply with a state law that allows no more than a 4 percent increase in taxable values from 2006 to 2007 for each class of property except utility property, which is limited to an 8 percent annual growth.
    Residential property taxable value is set at 44.0803 percent of the assessed value, while commercial property is limited to 99.7312 percent of the assessed value. This year’s rollback limits agricultural property to 90.1023 percent of the assessed value.
    Agricultural property, excluding agricultural dwellings, is assessed according to a rolling five-year productivity value, not market value. If one year during the five-year period yielded poor productivity, it affects the rollback.
    The rollback results in a decrease of actual assessments of residential property, including farm dwellings, from about $125.4 billion to $55.3 billion. Agricultural values will decrease from $25.5 billion to $23 billion and commercial values will go down from $32.7 billion to $32.6 billion.
    McGovern said some farmers are happy because of the rollback in agriculture land value, but county officials and government-funded institutions like public schools will likely suffer.
    Some people, such as farmers, may see the results as a positive thing, because it means they’ll pay less in property taxes. But government-assisted entities like public schools and county officials are not happy with the findings.
    Tom Mullen said the responsibility to fund government-funded projects simply changes hands from taxpayers to county officials, who now need to find additional funding from elsewhere.
    “It’s a good thing for property taxpayers, but services might suffer,” Mullen said.
    McGovern agreed, and added that the rollbacks are especially harmful to rural communities, like Howard County.
    “The county’s costs to provide services increase yearly just as they do for the private sector,” McGovern said. “The state mandated especially high rate of rollbacks this year for Ag land adversely affects a county’s ability to pay for those ever-increasing costs.”