The Sioux City Council recently went through their annual budgeting process that analyzes both the CIP (capital improvement program) budget, which is primarily large scale projects coming in the next five years and the operating budget for all city operations. Previously, I have found this experience to be challenging but rewarding. A number of hours and hundreds of pages of reading go into preparing for the marathon 5+ hour budgeting sessions for each respective budget; however, the CIP budget gets me excited about the difference we can make with large scale projects such as infrastructure improvements and recreation additions throughout the city. The operating budget is a chance to reflect on the work that our team is doing, see how they could be more efficient, and make adjustments where necessary. At least, that is how I have felt about the budgeting process the last four years; this year was different.
Going into this budget cycle, I feared that it would be different than the others. I had heard from the staff that there would be a significant tax increase. The worst part about this tax increase is that it isn’t going into our roads or expanding our parks. This tax increase is largely due to rising insurance premiums and a bill passed by the Iowa State Legislature. Residential city taxes per $100,000 of assessed valuation will increase $15 and commercial/industrial property tax per $100,000 will increase $88. If you own or have a mortgage on a $200,000 house, the city portion of your taxes will increase by $30 for the year.
Similarly, to how you may have seen your insurance premiums increase, the City did as well. Our combined increase in insurance premiums for general liability and property/building insurance increased more than $680,000 this last year.
In addition to insurance increases, the State of Iowa in 2021 passed Senate File 619, a property bill that restructured how our mental health service would be funded through the state. As part of this change in mental health funding, the commercial and industrial rollback replacement payment, commonly known as the backfill, was altered. Traditionally refunded to the cities, this backfill payment will be reduced each year from the fiscal year 2023 through the fiscal year 2026. This reduction in tax revenue coming back to Sioux City from the state of Iowa amounted to $458,710.67 this year alone. The scary reality is this figure is only going to get worse through 2026. It should be said that when the “backfill” bill initially passed through the legislature, the revenue that the state collected from the cities was guaranteed to be paid back to us. Then, Governor Terry Branstad vowed that if the legislature ever tried reversing the legislation, he would veto it. Our current governor did not follow suit.
While this increase may seem insignificant for some, it can be detrimental to those on a fixed income, such as Social Security, or those who are struggling to make ends meet. That is why this budget cycle was so different from the others. Three of the last four years, we were able to lower property taxes. Had our insurance premiums not grown so significantly, or had the governor vetoed Senate File 619, the people of Sioux City would have seen a decrease in their taxes by $3.34 per $100,000 of assessed property value.
By Alex Watters