State tax reform impacting city’s budget

Several important elements that will impact the city’s budget were discussed during a city council budget workshop on Monday. Finance officer Lisa Frasier explained how changes in the state property tax reform will effect the city both next year and for several years to come.

“I think everybody kind of knows of the state’s property tax reform and we’re starting to see some of the effects of that in our budget,” Frasier said. “That is really showing that gap is widening and brings us down to earth as to what is happening with our valuations.”

For the City of Newton, assessed valuations on property taxes increased more than $9 million from $803 million in Fiscal Year 2017-2018 to more than $812 million in FY 2018-2019. With the tax reform, the taxable valuations for the city are down about $12 million to $427 million from $439 million.

“Some of the reason for that is the residential rollback. (The FY17-18 percentage of) 56.9391 is going to go down to 55.6209 (in FY18-19) which is a decrease of 1.3 percent on every house in town. That is pretty substantial,” Frasier said. “The other piece of the puzzle is the multi-residential rollback which is a whole new classification of property that the state made in the state reform bill. That is going down from 82.5 in FY17-18 to 78.75 in FY18-19 which is down 3.75 percent.”Frasier said the multi-residential percent will continue to decrease 3.75 percent until 2024 when it will equal the residential percentage. Currently, Frasier said the number is scheduled to bottom out at 56.9 percent but it could be even lower if the residential rate falls.

“If it is at 49 percent in 2024, all of those multi-residential will go down to 49 percent. We could go from 63.75 in 2023 to whatever the residential rollback is in 2024, we don’t know what that is. We hope it stays up in the 50s at least.”

City administrator Matt Muckler said seeing those numbers can be frustrating, especially with the positive work the city has been doing to increase new home ownership in the community.

“When you look, the assessed valuations are up, you think ‘alright we are doing our job.’ We are getting some growth in the community, we’re growing and seeing several million dollars is added to our assessed value,” Muckler said. “Then you look at the taxable valuations and the rug is pulled out from underneath us. Even though we’re growing as a community, we are getting less revenue.”

While the numbers are not favorable for the city, Muckler said the council has been moving in the right direction to deal with the decreased funds. By looking at the long-term financial situation and not taking a short-term view, the council is helping set up the city for potentially hard years to come.

“It is not doom and gloom, it’s going to be tough, we’re going to get through this and have a good budget. We’re not going to raise the levy ... We’re going to try to get as much of the tools to our departments that they need to go a good job and provide a great level of service to the community,” Muckler said. “We’re going to be good this year. What the council needs to be considering is how does what we do this year effect fiscal years 2020, 2021, 2022, we need to be thinking out two or three years.”

The council will continue budget talks at its next workshop on Monday.

Contact Jamee A. Pierson at 641-792-3121 ext. 6534 or jpierson@newtondailynews.com