Divided Dubuque council backs slight tax rate decrease, balks at further reduction

Dubuque City Council members on Monday night approved a proposal that includes a slight reduction in the property tax rate for next fiscal year.

However, the majority of the council did not support a newly proposed further reduction, though members left the door open for additional reductions as they move through the budgeting process.

Council members voted, 5-2, to set a March 1 public hearing on a resolution establishing the maximum amount of property tax dollars the city can collect in fiscal year 2022, which starts on July 1. That maximum figure was tied to a maximum property tax rate of $10.05 per $1,000 of assessed value, a reduction from this year’s rate of $10.14.

David Resnick and Laura Roussell cast the votes in opposition.

The average homeowner in the city — the owner of a residential property valued at $146,467 — would see the city portion of the property tax bill increase by $12.49 despite the decrease, however. That is because, next fiscal year, the state’s residential rollback factor will increase the percentage of a property’s value that each resident is taxed on from 55.0743% to 56.4094%.

City staff originally proposed setting the maximum property tax rate at $10.05. That would represent a 0% increase in the city portion of property tax for commercial properties; a decrease for industrial properties by 0.3%, or $14.20; and a decrease for multi-residential properties by 6.15%, or $116.55.

City Manager Mike Van Milligen stated in a memo to council members that the recommendation was made in order to minimize taxes on commercial properties and multi-family residential properties in order to ease the burden on businesses and those living in apartments who were negatively impacted by the COVID-19 pandemic, while also providing necessary funding for the city to pursue City Council priorities.

However, on Monday, city staff submitted a revised recommendation to reduce the maximum property tax rate instead to $9.986 per $1,000 of assessed value.

Van Milligen explained that the property tax rate could be reduced by utilizing a fiscal year 2021 estimated revenue balance of about $400,000.

Resnick made a motion to approve that revised, lower tax rate, but it failed by a vote of 5 to 2. Resnick and Roussel cast the two votes in favor.

Resnick said he believed the council should take advantage of the city’s efforts to reduce the tax burden on residents.

“I would be more inclined to reward the citizens of Dubuque with that extra work that our staff has done in order to reduce the tax rate and tax amount for the citizens,” Resnick said, later adding. “I think they have the numbers in a very good space.”

However, other council members expressed concerns that the proposed maximum tax rate would be too low for the city to pursue its desired priorities.

“You can lower it as you go through the budget process,” said Council Member Brad Cavanagh. “If we go with the lower rate that the city manager has suggested to us in the memo, we’re really cutting it close.”

Mayor Roy Buol said he agreed with Cavanagh and stressed that the council cannot raise the tax rate once it was approved for the public hearing. It can be lowered, however.

“I really believe we need to give ourselves some wiggle room as well,” Buol said.

If the maximum property tax rate is approved, property tax revenue for the city in fiscal year 2022 would come to $26,630,342, a 1.6% increase over Fiscal Year 2021.