School District proposes tax increase

BY NORA HEATON | MARCH 08, 2010 7:30 AM

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No one likes paying taxes in a recession.

But unless the state can provide more funds for Iowa City schools, the School District may have to raise property taxes by almost 15 percent.

The current property-tax rate for the district is $14.19 per $1,000 of property value. The district has proposed that number be increased to $16.31 for the 2010-11 school year.

“That puts a huge burden on families,” said Iowa City resident Roberta Caris. “We’re going to have to watch our spending very closely.”

Paul Bobek, the district’s executive director of administrative services, will present the preliminary certified budget to the School Board at its Tuesday meeting — and revenues are scarce.

The Iowa City School District is grappling with a 10 percent across-the-board cut in state funding, he said. Officials expect that cut, ordered by Gov. Chet Culver, will remain in place.

The district compensated for last year’s cut with reserve money, Superintendent Lane Plugge said.

But having burned through its reserves, the district will need to try a new avenue for revenue if the state does not amend the cut for the 2010-11 year.

“We have to ask, ‘Have economic conditions at the state level changed enough for us to rely on them?’ ” the superintendent said. “If they don’t, we will need to raise property raises.”

Plugge, whose resignation will become effective this summer, will no longer be superintendent by the time the tax hike is implemented.

Iowa’s state universities have also struggled with funding following cuts in state funding. This school year, for instance, is the first in which students’ tuition makes up more than half of the UI’s general-education fund. The UI does not pay property taxes.

Some residents, such as Caris, have expressed concern about the increase. Nonetheless, she said, she is receptive to higher taxes for the benefit of education.

“I think it’s good that we keep our schools up-to-date,” said Caris, whose two children attend City High and Longfellow Elementary. “It’s just not the best time.”

With statewide cuts in school funding, the possibility of an increase could affect communities all across Iowa.

Kancha Ramchandran, who lives in the North Liberty area, said she recognizes that the balance between education and tax is a “tricky issue” for communities everywhere.

“If that money were to go toward creating more jobs for the local economy then it would be worth it,” she said.

The district, however, is under financial pressure to provide incentives for early retirement to help save. Bobek estimated on March 5 that around 40 employees would retire at the close of the school year. A property-tax hike would feed into the management fund, which helps pay for early retirement.

Bobek routinely updates the School Board on budgetary concerns. Most of the discussion has focused on spending authority, he said. He has briefed the board on how much the district can spend on resources and how money should be distributed.

But now that state departments have been buzzing about budgets for next year, the issue of revenue has come to the forefront.

“This is all in anticipation of state aid not being there,” Plugge said, and the final numbers are not yet in.

After hearing the proposed budget at the Tuesday meeting, the School Board will review an updated budget on March 23 and vote on approval of the property tax rate on April 13.

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