March 29, 2024

Bond issue would raise some taxes $8 per year

Berg bond only impacts debt service levy

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The Newton Community School District’s proposed levy increase for a Berg Complex rebuild will only give some property owners an increase of about $8 per year in taxes — but there’s much more to taxes or levies or valuations than this simple example.

Between school district, municipal and county taxes, a property owner doles taxes to several local governments each year, even if it’s all included in mortgages.

Suppose a homeowner bought a house within the NCSD’s boundaries, years ago, for about $80,000, and with the twists and turns of the real estate market and a few improvements, the house is assessed at about $100,000 valuation by the county assessor.

Iowa residents pay taxes on about 56 percent of their assessed tax valuations, so levy rates are assigned based on that taxable amount. The homeowner pays taxes based on about a $56,000 value, with the majority of the tax going to the City of Newton and the Newton Community School District.

Jenny Blankenship of The PFM Group, which counsels the Newton and Prairie City-Monroe school districts and many other central Iowa governments on financial matters, said school districts and municipalities commonly are the biggest percentage of property taxes.

“School districts and municipalities often take the biggest fraction of property taxes — that’s common across the U.S.,” Blankenship said. “But even within the large portion of property tax paid to schools, very little of that is assigned to paying down district debt.”

State code dictates limits of tax rates that local governments can impose, based on the assessed value of all properties within its boundaries. Those calculations have led Newton Schools to imposing a $15.81 rate, per $1,000 of tax valuation, on property owners in its district for the 2016-17 school year.

Out of the $15.81 Newton Schools collect from each $1,000, it will only spend $2.62 to pay down debt. The bond for the Berg facility would only affect that debt service levy, which would raise the overall school levy by eight cents per $1,000 to use $2.70 to pay down debt.

The NCSD would have 20 years in which to pay off its new bond debt, so the bond rate it can get if the Berg vote passes will determine how much it actually costs the district each year to pay off the debt.

“Right now, bond rates are at a 40-year low,” Blankenship said.

This means the owner of a home with a tax valuation of $100,000 would only see an annual increase of $8 for the debt service alone with the four-cent increase.

More than $11 of that $15.81 Newton Schools levy goes to a general fund.

If a property’s assessed value is $178,000, the levy would only be assessed on about $100,000 — the taxable valuation. A Newton school district resident would pay about $4,200 per year in local and county taxes, but only $1,576 of those taxes would go to the NCSD.

Schools are only one piece of the local tax puzzle.

Newton and Lambs Grove non-agricultural property owners have a much higher tax rate than anyone else in the county. City of Newton residents have a total tax levy of $17.15 this year, and between that levy, Newton Schools’ $15.81 levy, $8.25 from Jasper County and four entities that take less than $1 each, those Newton property owners pay more than $42 per $1,000 of valuation in 2016-17.

Lambs Grove property owners pay more than $37 per $1,000 of tax valuation, while property in Monroe and Prairie City is taxed at a much lower rate. Property in these areas which happens to also be in the Newton school district, is only at about $29 per $1,000.

The main difference between residential and commercial or industrial property is that tax valuation is 90 percent of assessed value.

An owner of a Newton commercial or industrial property assessed at $100,000 is paying more than $42 for every $1,000 on 90 percent of the valuation, or $90,000. A four-cent increase from a Berg bond would take the tax on that property from $3,816 this year to about $3,824.

Owners of multiresidential units pay taxes on about 86 percent of assessed value for fiscal 2017, while agricultural land is levied at about 46 percent.

Rural county residents pay lower taxes due to not having the municipal tax, but also don’t technically have the convenience of parks, hospitals and businesses nearby.

“Keep in mind, this is just for the debt service levy, so if any other school or other local tax goes up, that will affect a tax bill, too,” Blankenship said.

Contact Jason W. Brooks at 641-792-3121 ext. 6532 or jbrooks@newtondailynews.com