Charles City Council OKs ‘max tax’ with tax cut; sets budget hearing with small increase

By Bob Steenson, bsteenson@charlescitypress.com

The Charles City Council spent just a few moments going through its “maximum tax” public hearing at the council meeting this week.

There were no comments submitted in writing or made by the public during the hearing — likely due to the fact that the amount of property taxes to be collected next fiscal year in the funds that are part of the max tax exercise will be less than the amount collected this year.

“The maximum levy is a process the state brought forward about three years ago. This will be our third time going through this,” said City Administrator Steve Diers.

“If your total spending, dollar-wise, is going to be 2% or higher than the previous year, then you would need a supermajority of the council to pass that,” Diers said, referring to the city budget and explaining another part of the max tax process.

“Because we had such a drop in taxable valuations this year, we’re working with a lot fewer dollars. So we actually have a negative max levy,” Diers said.

“Our max levy is negative 3.77 percent, which is good that taxes are lower, but bad because we had such a drop in the taxable valuation, so there’s lots of things that we don’t have the funding there for,” he said.

The max tax levy resolution passed by the council sets the maximum property tax the city can collect in fiscal year 2022-23 for the included funds at $3,577,652, down from $3,718,077 in the current fiscal year.

The max levy is $13.85569 per $1,000 of taxable valuation.

Diers said the decline in taxable values was probably an anomaly caused by lower selling prices for some properties in 2020 during the pandemic.

“At least I hope it’s an anomaly, because we can’t operate long-term if it keeps going down like that. It’s just one of those things and so this year we’re seeing a negative,” he said.

The maximum tax levy includes only some of the city’s funds that make up the entire property tax levy. Later in the meeting the council set the public hearing for the actual budget, to take place at 6 p.m. Monday, March 21.

The total proposed city levy is $16.20 per $1,000 of taxable valuation. Diers said that’s up from the current year’s $15.98, so about a 22 cents increase, or about 1.4% higher.

The reduction in property valuation was a real challenge, Diers said.

“That levy rate we were looking at one point was probably going to be another 80 cents or more higher than that, but we looked at ways to utilize reserve funds that we have and maybe defer some projects and some things,” he said.

“We’re going to have to think about what’s our long-term solution for just basic operations on some things,” Diers said.

“Thankfully this year we had enough transfers coming in from various ways that it just so happened to defer that loss a little bit. That and use of reserves is what’s kind of getting us through this year, even with the tough budget conditions,” he said. “On the whole that just speaks to good council planning, good use of funding, good practices over the years that we’re in that position.”

Also at the meeting this week, the council:

• Discussed a request by Omnitel Communications for access to city right of way to plan a phased project offering fiber internet service to certain business areas (see related story)

• Approved the mayor appointing Jeff Titus to the Planning and Zoning Commission.

• Approved reappointing Beth Diers, Brandon Franke, Jeremy Heyer and Linda Klemesrud to the Housing Board.

• Approved a request to close streets around Central Park on July 1 for the annual Independence Day Kids Parade and Kids Day events, sponsored by Soifer Family McDonald’s and First Citizens Bank.

• Approved short term borrowing of up to $170,000 to fund Police Department ammo, guns, equipment and clothing; Fire Department bunker gear equipment and clothing; Street Department clothing and tree removal costs; tornado siren relocation; animal control cages; and nuisance abatement demolition.

• Approved spending $25,250 to purchase a used 2018 GMC two-wheel drive pickup with about 70,000 miles on it for the Street Department.