Decorah City Council Reviews FY27 Property Tax Reform

Your contribution today guarantees Decorah News is asking the questions tomorrow. Act now. DECORAH — The Decorah City Council reviewed the potential impacts of recent property tax reforms on the city's fiscal year 2027 budget during a work session Monday night. City Manager Travis Goedken said Decorah's total property valuation increased by 15.26%, while taxable valuation rose by 10.37% because of rollback rules and House File 718. He noted that higher property values do not necessarily result in higher taxable values. Goedken said most property tax reforms shift who pays taxes rather than reducing overall tax collections. He cited Iowa's 2013 property tax reform, which lowered taxes for commercial and industrial properties while increasing the burden on residential taxpayers. The city's combined general fund levy decreased from $8.10 to $7.88 per $1,000 of taxable valuation. Despite the lower rate, the city anticipates a 7% increase in general fund revenue, approximately $250,000, due to new property additions. Under the proposed fiscal year 2027 budget, the combined general fund levy would be reduced by nearly 6% while total dollars collected would increase by 3.89%. Council member Emily Neal asked about the debt service levy. Goedken said it is not yet fully included in the budget and that property tax bills could be lower if the levy is reduced. He added that the employee benefits levy could be adjusted to help offset debt costs. Goedken said the city remains in a strong financial position, with nearly $11 million in cash reserves across all funds, helping to maintain a favorable bond rating. He said the general fund remains the primary concern, particularly due to employee labor costs. The council also reviewed property tax exemptions, which reduce tax revenue. Goedken said exemptions have increased in recent years, particularly in fiscal years 2025 and 2026, and that eliminating the multifamily residential classification shifted more tax responsibility onto single-family homeowners. Council members discussed whether enterprise funds—including water and sewer funds—could be used to reduce the debt service levy. Council member Steve Zittergruen asked about the process, citing debt related to the Heivly Street project and emphasizing the importance of maintaining stable tax rates and avoiding the use of property taxes to subsidize enterprise funds. "We have time to discuss using enterprise funds to buy down the Heivly Street debt," Goedken said. "A decision could be made during budget discussions, but to include it on the debt service levy, a resolution must be approved before April 15. Notices would be prepared assuming the levy covers it, and afterward the council could adjust downward if enterprise funds are used, but levies can't be increased after the hearings." "I'm not interested in raising utility rates," Neal said. "We've discussed it before and can revisit it, but I agree we should include it in our debt service and make a final decision later if we choose to proceed." The council will continue budget discussions, with public hearings anticipated in April. Don't miss a beat! Subscribe for free and receive the stories, insights, and events that keep your community thriving.