House File 718 (HF718) will go into effect at the beginning of the Marshalltown fiscal year on July 1. Passed by the Iowa Legislature earlier this year, it is a $100 million property tax cut that consolidates city levies into the general funds, meaning the Marshalltown City Council could decide to allocate the levies for other uses if it chooses.

The T-R has written three previous stories about the possible effects of HF718 — the loss of some funding for the Marshalltown Public Library, the Marshalltown Municipal Band and the Albion Municipal Library.

Diana Steiner, finance director for the City of Marshalltown, said Marshalltown has special levies for the library, band and the Marshalltown Arts and Civic Center. Each received annual funding from levies approved by votes of the citizens. Yearly, the library received $250,897, the band received $9,000, and there was a $100,000 annual levy for the MACC. Each levy will be consolidated into the general fund. The council could decide to use other financial sources, such as the local option sales tax, to help fund the library, band and civic center, she said.

Before the passage of HF718, Steiner said most cities requested a $8.10 regular levy and the $0.27 emergency levy.

“Now, each city has their overall general fund levy calculated based on their growth,” she said. Steiner said HF718 reduces the levy by constraining growth by two or three percent per year, depending on non-TIF taxable growth:

Less than three percent, which equals no reduction;

More than three percent but less than six percent, then a two percent reduction factor is applied;

More than six percent equals an application of a three percent reduction factor.

“The ultimate goal of HF718 is to drive the levies back under or to the $8.10 maximum rate over time,” she said.

It is not yet known how much money HF718 will put back into the city general fund. Steiner said they will have an idea after the tax valuations are received from the county.

“The new levy rate will depend on non-TIF taxable growth,” she said.

In January, Steiner said that assessed valuations increased, which began to affect next year’s fiscal budget. However, she added there are rollbacks.

Residential property taxable valuations fell from 55 percent to 46 percent. Commercial and industrial properties are also subject to the residential rollback on the first $150,000 of valuations and then 90 percent after that.

“In the past, the city was thankful when valuations went up, so we could use the additional funds to cover the increased costs due to inflation and negotiated wage increases,” Steiner said. “With this new legislation and the new formulas to compute the consolidated general levy, the amount of available growth in revenues is limited.”

The city council will begin discussing the next fiscal year in January. Then there will be a better idea as to what the city council will do with the consolidated levy funds, according to Steiner.

“Until we receive our taxable valuations from the county, it is unknown what programs will be funded and at what level,” she said.

As some Marshalltown residents are concerned about the lack of funding to fix roads, she added the levy funds cannot be used for such expenses.

“Street repairs are primarily funded by road use tax, bond funds and local option sales tax, not the general fund,” Steiner said.

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Contact Lana Bradstream

at 641-753-6611 ext. 210 or

lbradstream@timesrepublican.com.