Decorah City Manager Warns of Misleading State Tax Notice Amid Legislative Changes

Quality journalism needs your support to thrive. Donate and keep the facts flowing DECORAH — City Manager Travis Goedken is warning residents about an upcoming tax notice that he says may cause unnecessary alarm, as it presents misleading information about local property tax increases. At a recent meeting, Goedken informed city officials that a state-mandated notice will soon be sent to property owners, appearing to indicate a significant increase in city property taxes. However, he emphasized that the notice assumes a 10% rise in property assessments, which he says is not accurate for every property in Decorah. "You're all about to get a letter from the county that says what the city property taxes are going to do," Goedken said. "You're going to get a letter in the mail for the county that shows the city's taxes, the school's taxes, and the county's. And it's going to imply that your taxes are going up by 12% with the city of Decorah, and that is not true. Our levy is going down." While the city's levy rate is decreasing, residential property owners will see a modest tax increase of 1.68%, assuming their property value remains unchanged from last year. Goedken attributed this to an adjustment in the state's residential rollback, which determines the taxable portion of a property's assessed value. The State's JustificationThe tax notice is part of Iowa's "Truth in Taxation" law, which was designed to increase public awareness of local government budgeting and tax rates. The law requires cities, counties, and school districts to disclose their maximum tax levy and projected tax collections to property owners before budgets are finalized. The intention behind the law, state officials say, is to ensure transparency by preventing local governments from increasing tax collections without informing residents and to "create more interest in the budget creation process." The notice assumes a uniform 10% increase in assessed values, regardless of whether actual assessments have changed. Critics argue that this assumption misrepresents the real tax impact on homeowners, potentially causing confusion and frustration. Goedken criticized the approach, saying that it inaccurately portrays tax increases and could lead to unnecessary panic among taxpayers. He further elaborated on the financial impact, stating that the notice fails to consider the complexities of the property tax system, including variations in individual property assessments, levy rates set by different governing bodies, and state-imposed limits on taxable value growth. The Impact of the Residential RollbackIowa's property tax system uses a "rollback" mechanism to determine the taxable value of a property. Instead of taxing the full assessed value, the rollback limits the percentage of a home's value that is subject to taxation. For the current year, the rollback for residential properties is around 47%, meaning homeowners pay taxes on only 47% of their property's assessed value. Each year, the rollback percentage can change based on a formula that considers statewide property value growth. The purpose is to prevent sudden spikes in tax burdens due to increasing property assessments. However, state lawmakers have proposed eliminating the rollback entirely, which would eventually mean property owners are taxed on 100% of their assessed value over five years. Goedken explained that such a change could significantly impact homeowners and businesses alike. "There [are] two proposed bills, one in the house [and] one in the senate. They're companion bills [with the] same exact language that would remove the rollback. So now everybody's assessed value over five years would eventually become your taxable value, including commercial industrial." The change could result in substantially higher tax obligations for property owners, particularly those who have benefited from the rollback's limiting effect on tax increases in previous years. Goedken noted that this could place a heavier financial strain on residents and businesses, especially as inflation and other economic factors continue to affect household and operational budgets. Currently, commercial and industrial properties are taxed at 90% of their assessed value, with the first $150,000 taxed at the lower residential rollback rate. Eliminating the rollback system would mean that all properties, regardless of classification, would eventually be taxed at their full assessed value, leading to a higher overall tax burden across the board. Preparing for Public ReactionCity officials are preparing for an influx of calls from concerned residents when the notices arrive. Goedken said he plans to issue a public statement clarifying the situation before the letters are mailed. "We want to make sure people understand the real impact of these changes," he said. Goedken urged residents to look beyond the surface of the tax notice and consider the actual changes in their tax bills. He encouraged those with concerns to attend upcoming city budget meetings or contact officials for clarification. In addition to direct communication with residents, city officials are considering outreach efforts such as public information sessions, social media updates, and printed materials that break down how property taxes are calculated and how the rollback and levy system interact. Goedken also addressed the broader implications of Iowa's taxation policies, noting that ongoing legislative discussions could reshape how municipalities generate revenue. He warned that if local governments are restricted in their ability to adjust levy rates or if rollback protections are removed, cities may have to explore alternative funding mechanisms to maintain essential services. "If the rollback is phased out, property owners will see a much larger tax obligation over time," he reiterated. Unlock a world of knowledge! Sign up for free DecorahNews.com newsletters and receive local news, local events and everything that is happening in and around Decorah.