Superintendent News & Views
How Would a Dissolution Affect Property Taxes?
By David Hill, Gladbrook-Reinbeck Superintendent
Several weeks ago, I invited district patrons to submit questions about the proposed dissolution of the Gladbrook-Reinbeck Community School District through an online form or by calling a special telephone line to leave a recorded message. In my next couple of columns, I will provide answers to the questions that I did receive.
This week, we’ll only cover one question because the answer is a lengthy one. The other questions and answers will likely be combined into one or two weekly newspaper columns, as I don’t expect them to take up nearly as much space as this week’s question. I hope the information provided helps district patrons to be educated voters as they head to the polls on September 12.
QUESTION: How would a dissolution affect our property taxes?
ANSWER: If a “YES” vote prevails and the district dissolves, all property currently in the Gladbrook-Reinbeck district would become part of one of the neighboring districts. So, the answer to the question depends on which district each individual property would become part of. Property tax rates are set annually by each district’s board as part of approving their annual budget, so the only number we can use for comparison purposes is the tax rates that are in effect for fiscal year 2018. The following graphic shows a comparison of fiscal year 2018 property tax rates:
Again, property tax rates are set annually by each school board so this could – and likely would – change over the years. Currently, taxes on property in the Hudson district are $3.37 per thousand dollars of valuation higher than property in the Gladbrook-Reinbeck district. That’s 30% higher than G-R’s current rate. It would be reasonable to expect that if G-R dissolves and your property becomes part of the Hudson district, you would see a property tax rate increase somewhere in this range.
Percentage-wise, here are comparisons for ALL of the districts involved in the proposed dissolution: NORTH TAMA: 5% lower; GMG: 26% higher; GRUNDY CENTER: 17% higher; HUDSON: 30% higher and, DIKE-NEW HARTFORD: 9% higher.
The Iowa Association of School Boards (IASB) has created a Tax Levy Impact Calculator, a spreadsheet tool that can be used to show the impact of a tax rate change. Using this tool, I thought it might be helpful to show you some specific scenarios. The tool uses average farmland values for each county. For home values, it’s possible to input the current taxable valuation into the tool to calculate property taxes. I won’t take space in this column to explain the concepts of tax rollbacks or to explain HOW these examples are calculated, but for those of you who would like to understand in greater depth, I will provide links to the calculation tool I’m using and resources that explain these taxation basics on my blog. You may even want to visit my blog, download the calculator, and input your own property values to see how a dissolution would affect your specific property.
According to the latest Census of Agriculture, the average Iowa farm is 345 acres in size. IASB’s Calculator, using average farmland values for each county, shows that the owner of a 345-acre farm in Grundy County near Reinbeck that would become part of the Dike-New Hartford district in the event of a dissolution could expect to pay an additional $450 annually in school-related property tax if taxed at Dike-New Hartford’s current rates.
Here are similar comparisons for a 345-acre farm for all parts of the current G-R district. A 345-acre farm that would become part of each of these districts could expect to pay the following amounts annually in comparison to their current G-R tax rates: NORTH TAMA: $192 less annually; GMG (Tama Co. portion): $992 more annually; GMG (Marshall Co. portion): $1,146 more annually; GRUNDY CENTER (Grundy Co. portion): $817 more annually; GRUNDY CENTER (Tama Co. portion): $642 more annually; HUDSON: $1,286 more annually, DIKE-NEW HARTFORD: $450 more annually.
Now an example for homeowners. For comparison purposes, we’ll use a home valued at $125,000 (the median value of an Iowa home according to Zillow.com) and in all of our comparisons, the homeowner will qualify for the homestead credit but not any other credits (such as the military service credit). IASB’s calculator shows us that the owner of a $125,000 home located in the town of Gladbrook that would become part of the GMG district could expect to pay $192 more annually in property taxes based on GMG’s 2018 tax rate.
Here are similar comparisons for all districts involved in the proposed dissolution. Again, this is how much more (or less) the owner of a $125,000 home which qualifies for a homestead credit could expect to pay in property taxes if their home becomes part of each of the following districts in the event of a dissolution: NORTH TAMA: $37 less annually; GMG: $192 more annually; GRUNDY CENTER: $124 more annually; HUDSON: $223 more annually, DIKE-NEW HARTFORD: $68 more annually.
There are a few disclaimers that come along with the IASB Calculator: The calculator does not consider the impact of deductibility of property taxes on state and federal income taxes; Rollback percentages are applicable for 1/1/16 valuations; Agricultural property taxes are computed using preliminary average county 1/1/16 agricultural values; and, calculations are estimates and may differ from actual amounts. Even taking these caveats into account, I hope this helps property owners to better understand the possible impact of the proposed dissolution.
FURTHER RESOURCES:
Want to enter the value of your own home to see how YOUR property taxes would be affected? Download the IASB's Tax Levy Impact Calculator HERE. (Requires Microsoft Excel. Click the "down arrow" in the upper left-hand corner of the file and download to your computer.)
To view the property tax rates for all school districts in Iowa, click HERE.
For an overview of how property taxes work in the state of Iowa, click HERE.
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