North Iowa Reporter

The Algona, Iowa, City Council held a public hearing during its Feb. 20 meeting to set the maximum property tax levy for the year, but officials cautioned that the 9% maximum likely won't be the final rate.

The council voted to set the maximum levy amount at $3,832,123, or $13.78 per $1,000 taxable value, according to a video of the meeting posted to YouTube. The hearing came after the passage of a bill that cut the amount localities can collect in property taxes due to a state error in 2021.

"After this hearing, there's a resolution to approve this notice and maximum property tax amount," City Administrator, Jacob Tjaden, said. "So this is just setting the ceiling that we would never get to anyway, but this would have an annual percent change of 9%."

Tjaden said property taxes are not increasing by 9% but that is “the maximum that we could collect if we so chose to."

Gov. Kim Reynolds signed Senate Bill 181 on Feb. 20, which changed the assessment limitation for residential property from 56.4919% to 54.6501% and pushed back the deadline for cities to file their annual levies from March 31 to April 30. While the law could provide tax relief for many property owners, municipalities now must adjust their budgets to account for the shortfall.

Tjaden said the council will set the actual rate at its next meeting.

The Senate first discussed S.B. 181 on Feb. 1, a bill fixing a state error in the 2021 property taxes that allowed municipalities to tax more than they should have. According to the Iowa Legislature website, the 2% cut means property owners won't have to pay as much on their tax bills, and some will see a smaller bill than they did last year. Statewide, the cuts are estimated to decrease collected property taxes by at least $133 million, with city budgets seeing $39 million in losses and school districts working with $21.4 million less.

Many amendments were proposed to try and provide relief for cities, either through spreading out the adjustment over several years or using the state’s surplus to cover this year’s adjustment, but none of those proposals passed with the bill. This will likely lead to many cities amending their budgets to make up the difference.