Property tax hike gets reluctant support
A 4 percent increase in the property tax rate that officials say is largely driven by an increase in the amount the local government is required to contribute for employee pensions appears to be on the path to approval in Fort Dodge.
Four of the seven City Council members said Monday evening that they would reluctantly support increasing the tax rate to $20.82 per $1,000 of taxable value in a move that would push the city property tax bill for the owner of a typical home to $920.
That increase would be for the 2013-2014 fiscal year which begins July 1.
The current property tax rate is $19.92 per $1,000 of taxable value. Owners of a Fort Dodge home with the median value of $85,000 now pay $880 to the city.
”I will support the levy for no other reason than that we are being forced,” said Councilman Robert ”Barney” Patterson. ”Our hands are tied. We have to pay it.”
Councilmen Kim Alstott, Dave Flattery, and Andy Fritz said they also would support the new tax rate.
Councilmen Mark Taylor and Don Wilson said they were opposed. Councilman Dean Hill, who was not at the meeting, left a message with City Manager David Fierke saying he would not support a tax increase.
”I won’t go along with raising taxes,” Wilson said. ”We’re already the highest taxes of any city of our size in the state.”
Wilson didn’t offer any statistics to support that assertion. When repeatedly pressed by Mayor Matt Bemrich to explain what he would do instead of raising the tax rate, he said he would ”use the fund balance for another year.”
Fierke said that move would reduce the property tax rate by 50 cents while draining the city’s reserves for its self-insured health care plan.
Although mandatory contributions to pension plans are a component of the tax increase, Fierke said city employees will not be getting a greater level of retirement benefits than they do now.
”No one here who works for the city is going to enjoy lavish improved benefits,” he said.
Following the meeting, Alstott and Richard Higgins, a former council candidate who is a frequent critic of local government, got into a shouting match in the lobby of the Municipal Building that could be heard throughout the first floor. Higgins was yelling about $500,000 he believes the city has, while Alstott replied that what Higgins wanted to do would result in laying off 10 people and cutting services.
During the meeting, Fierke outlined the expenses driving the tax increase.
In the current fiscal year, the city must pay $996,097 into the Municipal Police and Fire Retirement System.
In the fiscal year that begins July, that amount will rise to $1,214,000.
Fierke said the rate at which the city must pay into that system will rise from 26.13 percent of an employee’s salary to 30.12 percent.
The amount that each employee pays into the retirement system is capped by state law at 9.4 percent of their salary, according to Fierke.
He said the retirement system has seen a sharp drop in the growth of its investments. He said the system experienced a $300 million gain in 2010-2011, but just a $4 million gain in 2011-2012.
That drop in investment income must be made up by contributions from the cities, he said.
”Essentially, this body didn’t force the taxes to be raised,” Bemrich said. ”It’s not the action of this body. It’s the action of the system that we’re a party to that did it.”
Noting that the city’s pension obligations are a factor of how many employees it has, Wilson suggested entering into an agreement with Webster County to have the Sheriff’s Department handle more of the law enforcement work. He said he would be interested in a deal in which the Police Department would be downsized and the Sheriff’s Department would add 10 more deputies.
Bemrich said joint ventures with other governments are worth exploring, but added that he thinks Webster County would send the city a bill for the costs of hiring more deputies to cover Fort Dodge.
Alstott said the people in Fort Dodge want more police officers, and added that any reductions in the Fire Department would cause insurance rates to go up in the city.
Bemrich also spoke in favor of maintaining a strong Fire Department.
”We are the regional leader in fire,” he said. ”We are depended upon to provide fire protection beyond just the city limits of Fort Dodge. If we want to be a leader in the region, we need to have a professional fire department. Businesses and industry are looking for that.”
Other benefit increases fueling the tax increase include these outlays:
– Health insurance: $2,566,980; up from $2,184,568
– Social Security and Iowa Public Employee Retirement System: $726,000; up from $642,000.