Cedar Falls city budget to increase 3 percent

Feb 3, 2010 — Waterloo-Cedar Falls Courier

Jon Ericson

Feb. 2, 2010 (McClatchy-Tribune Regional News delivered by Newstex) -- CEDAR FALLS -- The City Council is preparing a budget for this year while keeping an eye on next year.

The budget proposal on the table would raise property taxes collected by 3 percent. For the average homeowner, it would mean an increase of 2.6 percent.

Even during the recession, the city saw its taxable property values increase by $37 million.

"We still had pretty solid growth," said Richard McAlister, city administrative services director. "We're looking more toward 2012, because there could be more challenges in 2012."

During a work session Monday, the council set a Feb. 22 public hearing date on the budget. The council can reduce the tax askings after the hearing date is published, but cannot increase them.

The budget calls for collecting $15.7 million in property taxes, a $464,950 increase over last year.

The owner of a $200,000 home would pay $1,218.70 for the city share of property taxes. That makes an increase of $31.56 over last year.

Commercial and industrial property owners would see a slight decrease of .23 percent, due to an increased burden on homeowners because of a shift in the statewide rollback on residential property.

Since most of the general fund, where property tax collections go, pays for employee salaries, those costs make up a significant chunk of the tax increase. Another substantial increase is to pay for a state-mandated increase in pension contributions. The city's portion of retirees pensions increased to 19.9 percent from 17 percent. That means the city will pay an extra $150,000 this year.

McAlister noted that projections could increase the city share up to 38 percent in the next five years.

In addition to that increased cost the state could likely cut $400,000 in annual state aid, the city could lose valuation due to flood buyouts and health care costs are also likely to rise.

With those budget pressures forecast for 2012, the city has looked at ways to deal with them. The city has a "soft" hiring freeze in place, meaning positions can be filled but only after evaluating other options. The city could also dip into reserves or start tapping into the $6 million in Tax Increment Financing revenues that currently stay in the industrial park for improvements.

McAlister warned that the city will need to continue growth, both in businesses and homes, to maintain services in the future.

"We need to make sure we're in a position for growth when it's ready to happen," McAlister said.

The city needs to have its budget certified and filed with the state by March 15.

At the work session, council members had few comments about the proposed budget.

The newest council member, Nick Taiber, wanted to emphasize coordinating between governmental bodies when possible, particularly during the recession.

Newstex ID: KRTB-0150-41738499