Dubuque City Council members passed a budget Wednesday that will result in no increases to the city portion of homeowners’ property tax bills.
The amended fiscal year 2022 budget, which was passed by council in a 7-0 vote, will reduce the city property tax rate by 2.51%. That means the city portion of property owners’ tax bill will remain unchanged for residential properties after accounting for the state’s rollback factor, which determines the percentage of a property’s value being taxed.
Commercial, industrial and multi-residential properties will see a decrease to the city portion of their property taxes.
Council members previously voted to set the maximum property tax rate for fiscal year 2022 at $10.05 per $1,000 of assessed value. That would have resulted in a city property tax increase of $12.49 for the average residential property owner.
However, City Manager Mike Van Milligen said funding from the federal American Rescue Plan Act will allow the city to reduce its property tax rate to $9.889 per $1,000 of assessed value.
Van Milligen said the city is projected to receive $27.4 million through the federal COVID-19 relief package. The city can lower its property tax rate using $425,000 of those funds for equipment replacements, instead of using property tax money. The rest of the federal funds will be used for capital projects, assistance programs and maintenance.
The budget for the fiscal year starting July 1 still comes with increases to water, sanitary sewer, stormwater and solid waste rates, which will result in the average user in Dubuque paying $39 more for the year.
Van Milligen said federal relief funding will allow the city to avoid budget cuts and layoffs, remove a hiring freeze on several vacant positions and fund equipment purchases and maintenance projects.
Council Member Brad Cavanagh commended the budget but questioned why officials did not devote more federal relief dollars to fund city improvement packages.
“It appears that you chose to apply all those saving to lowering the property tax rate rather than funding some of these improvement packages that we were not originally able to fund,” he said.
Van Milligen said city officials are focusing on using the money for projects that will not come with recurring costs in subsequent years, which would require the city to increase taxes to pay for them.
“We would basically be digging a hole for future budgets,” he said.
Council Member David Resnick praised the budget, saying the city is accomplishing a lot while maintaining a relatively low tax rate for a city of its size.
“They’ve done all that and included funding for a more inclusive city,” he said. “That’s a really tall order this year, and they pulled it off.”
Council Member Laura Roussell said she believes the budget points the city in a positive direction.
“I think overall, this budget will allow our community to grow and prosper,” she said. “This budget will still provide the services that our residents and businesses expect.”