Iowa City metro property tax rates are changing. Here's how much you will be paying to own land
Most property owners are set to pay about the same, or a little less, in property taxes in the Iowa City metro area after Johnson County and its cities approved their budgets for the next fiscal year.
Several Johnson County cities are either maintaining or lowering their property taxes compared to the previous year, a trend city staff attribute to the area's growth rate. Together, the county rate and city rate make up a majority of the property taxes landowners pay, along with school district rates those of smaller entities like Kirkwood Community College.
Iowa City, North Liberty and Johnson County plan on lowering tax rates for the new fiscal year starting in July. Tiffin plans on maintaining its current property tax rates. Coralville and Solon are increasing property tax rates.
But change is on the horizon for some of these communities compared to past trends.
While Iowa City has worked to reduce its rate from $17.84 for 11 consecutive years, city staff expect that to plateau for numerous reasons, including growth rates leveling out and state law changes affecting city revenues. Tiffin, which has largely kept its rate flat the last several years, may soon see an increase in preparation for new city services and large capital projects.
Here's how property tax rates compare in the Iowa City metro:
Johnson County
FY 2023 property tax rate for general services: $6.04 of $1,000 of taxable value
FY 2022 property tax rate for general services: $6.17 of $1,000 of taxable value
The county general services levy is for all property located in incorporated areas, or cities. These properties do not have to pay the additional rural services property tax levy.
FY 2023 property tax rate for rural services: $3.69
FY 2022 property tax rate for rural services: $3.77
The county rural services property tax levy is for all property located outside incorporated areas. Residents in unincorporated Johnson County pay this rate on top of the general services property tax levy.
At a March 15 meeting of the Johnson County Board of Supervisors, Finance Administrator Dana Aschenbrenner walked the board through highlights of what the property taxes paid to the county will be used for and why the levies decreased.
He said the board has been diligent in controlling the county's property tax levy over the last 10 years, when it decreased about 69 cents. This year, the decrease is about 12 cents for general services and 8 cents for rural services.
"While this is not a large reduction in your overall property taxes, it does demonstrate the county's intention to keep our residents' property taxes at a reasonable level and avoid any large increases from one year to the next," Aschenbrenner said.
Aschenbrenner also pointed out that Johnson County's taxable value growth was "quite disappointing," which may impact future budgets. Since FY 2017, Johnson County has experienced anywhere from 6.76% growth to 3.76% growth. Last year, taxable value grew only 1.92%.
Still, Johnson County's U.S. Census results showed promise. It was one of 31 of Iowa's 99 counties that gained population, trailing only Dallas County (50%) in total growth rate. Johnson County grew 16.5% and Aschenbrenner's presentation pointed out that the county has well over $10.25 billion in taxable value.
More on Johnson County:
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Iowa City
FY 2023 property tax rate: $15.63
FY 2022 property tax rate: $15.67
For Iowa City residents, city property taxes account for 41% of the total paid, in addition to Iowa City Community School District and Johnson County property taxes.
This will be the 11th consecutive year that Iowa City will decrease its property tax levy, starting in 2012, when the rate was $17.84. The rate has decreased significantly compared to Iowa City's neighbors and larger cities in the state, from one of the most expensive cities to own property in to being in the middle of the pack.
City Manager Geoff Fruin told the Iowa City Council in January that challenges to this year's budget and the next few years include inflation, changes to state law lowering the taxability of multi-residential units, stagnating growth in taxable valuations and a rollback on residential taxes by the state.
Fruin and city staff said that as these factors strain city revenue and the tax base erodes, Iowa City will struggle to keep lowering property taxes. But no increases are foreseen in the near future.
More on Iowa City:
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Coralville
FY 2023 property tax rate: $14.31
FY 2022 property tax rate: $14.28
Coralville Finance Director Tony Roetlin presented to the City Council on Feb. 8 about the FY 2023 budget and proposed changes to the city's property tax rates, saying the slight increase is due to a valuation change late in the process last year, and it resulted in slightly less revenue for the city during the current fiscal year. This next budget is meant to restore the tax rate to its intended level.
He said that, like other cities, Coralville is facing challenges affecting revenue such as rising costs due to inflation, planning for future needs in a growing city and revenue lost during the COVID-19 pandemic. One way Coralville is planning to address this lost revenue is using $2.7 million from the American Rescue Plan to fill the gap largely left by a dip in hotel and motel taxes.
"In 2023's budget, I think we can safely say that as long as nothing changes, there are lesser impacts (of the COVID-19 pandemic) but they are still there," he said.
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North Liberty
FY 2023 property tax rate: $11.32
FY 2022 property tax rate: $11.52
The North Liberty City Council voted to lower the property tax rate for FY 2023. City Administrator Ryan Heiar said that taxable value growth, in addition to the city's management of the deficit with a $1.4 million surplus, led to it being able to decrease the overall rate.
Heiar told the City Council in January that North Liberty’s taxable value grew by 6% this year, which was better than anticipated given the reduction in the residential rollback. This is something North Liberty and other cities have been worried about affecting city revenue for years, in addition to the state's property tax backfill.
"As state support dwindles and the state Legislature makes it more difficult for urban cities to operate, presenting a responsible and effective budget becomes more difficult," Heiar said.
The city will be expanding its services in the new fiscal year, including adding a police lieutenant, firefighter, parks and recreation department staff and new vehicles. The city also plans to remodel library space and continue planning a new City Hall.
More on North Liberty:
Tiffin
FY 2023 property tax rate: $11.80
FY 2022 property tax rate: $11.80
The Tiffin City Council voted to keep its levy rate at $11.80.
City Manager Doug Boldt told the Press-Citizen that Tiffin has kept this same rate since about FY 2016 and largely attributed it to the city's booming growth, doubling its population between 2010 and 2020. Boldt has previously told the Press-Citizen he expects Tiffin to double in population again over the coming decade.
Boldt said that, as Tiffin continues to grow at such a rate, the city may have to assess an increase to property taxes in order to keep up with services. One project it will weigh soon is a new recreation center in partnership with the Clear Creek Amana School District.
The Press-Citizen previously reported that Tiffin is considering creating its own police department as it grows.
More on Tiffin:
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Solon
FY 2023 property tax rate: $10.98
FY 2022 property tax rate: $10.92
The Solon City Council approved a small increase to its property tax rate in FY 2023.
While Solon is growing like the rest of Johnson County, its growth in taxable value of property is still not enough to avoid an impact to city revenue.
Solon City Administrator Cami Rasmussen told the Press-Citizen that Solon will be adding a new employee and must also account for increases to property and liability insurance rates, a challenges other cities are also facing.
Rasmussen said she thinks the damages and resulting insurance claims from the 2020 derecho could be what's impacting insurance rates, which are going from what usually is a 5% increase to a 10% increase.
Despite these budget woes, Rasmussen said the state law resulting in lower property tax burdens on landowners will provide a positive impact for residents.
"The benefit is that it is less property taxes for the owners, but that filters less dollars for cities to invest in the community where people live and pay property taxes," she said. "It's a cycle that has a benefit and disadvantages both for property owners."
Rasmussen said one positive is that Solon has had fairly consistent levy rates over the last several years and has still been able to accomplish many projects she thinks have helped residents.
More on Solon:
Johnson County leaders predict housing boom in Iowa City, Tiffin; new businesses in Solon
Tiffin, Solon weighing different futures when it comes to law enforcement needs
George Shillcock is the Press-Citizen's local government and development reporter covering Iowa City and Johnson County. He can be reached at (515) 350-6307, GShillcock@press-citizen.com and on Twitter @ShillcockGeorge
This article originally appeared on Iowa City Press-Citizen: How Iowa City area property taxes compare to each other
