Dubuque Property Tax Increase Will Raise Homeowner Bills

In the grand scheme of things, a "dime" doesn't seem like much. However, as a person who penny pinched and lived paycheck to paycheck for quite some time when purchasing my home, I can assure you another 10 cents on your property taxes adds up. That's according to the latest press release from the City of Dubuque.

What’s actually being proposed

Right now, Dubuque’s city property tax rate sits at: $10.06 per $1,000 of assessed value. Under the proposal, it would rise to: $10.16 per $1,000 That’s an increase of about 10 cents per $1,000 of value; hence the “dime.”

Now consider your boss, employer, or company you work for. When taxes go up, you're even less likely to get that "never coming" raise you've been hoping for. Let's face it, some government functions are necessary, and nothing is free. The funds from property taxes help keep citizens safe, roads operating correctly, and public spaces well managed.

Why homeowners may feel closer to a 3% increase

Property taxes aren’t just about the rate. They’re also based on what your home is worth. And those values have been climbing, as well. The average home in Dubuque is now assessed at about: $213,211.

When looking at the city’s own estimates:

Current annual city tax: $889
Proposed annual city tax: $916

That’s an increase of around $26.68 per year, or about a 3% increase for the average house value and homeowner. So, while the rate only goes up 1%, the combined effect of higher values and the new rate push the actual bill higher.

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Here's the thing though; this proposed tax increase (in several areas I will break down) will generate nearly $32 million. That's a 6.9% increase. Way more than what most people even hope for in a raise at around 3%. Let's break these numbers down based on the latest press release form the City of Dubuque.

So let’s slow this down and put it in plain English. First off, there are two different things going on here, and they tend to get lumped together:

The tax rate (what the city controls)
Your property value (what the assessor sets)

And that’s where a lot of folks get tripped up. See, the City Council doesn’t set your home’s value. That’s handled by the Dubuque County Assessor's Office, which is required under Iowa law to estimate what your property would sell for on the open market. They base that on:

Recent home sales nearby,
Size, age, and condition of your home
Any improvements or upgrades

So, if houses in your neighborhood are selling for more, your assessed value will go up, even if nothing about your home has changed. Pretty rough deal if you ask me. Shouldn't you only be taxed on what you paid and not some arbitrary number? I'm sure I am preaching to the choir here. Trust me renters, you won't get away unfazed by this, either. It's pretty much a guarantee those increases are going to be passed right along to you by the landlord or owner.

What about local businesses?

First off remember this phrase, equity is not equality. So, the impact isn’t the same across the board. For smaller commercial properties, taxes actually dip slightly. But for average or larger properties, the increases are much more noticeable. For example: an average commercial property valued at $625,000 will go from about $4,254 to $5,024, an Increase of around $770 or 18%. For the average industrial property of $731,000, it will go from about $5,090 to $6,001. That's an Increase of $910 or nearly 18%.

For commercial property valued under $450,000 the tax decreases slightly. Likewise, industrial properties valued under $450,000 will also see that decrease. Food for thought, those costs don’t just disappear, they tend to show up somewhere else. That could take the form of higher prices, slower hiring, or fewer raises.

The city says these increases are necessary to help maintain current city services without cuts with the funds being ear marked for:

Employee wages and benefits
Equipment and maintenance
Infrastructure upkeep
Inflation of everyday expenses

At the end of the day, the tax rate increase is fairly modest at about 1%. However, rising property values push the real impact closer to 3% for homeowners. And higher-value commercial properties could see much larger jumps affecting those homeowners not only at home, but at work.

Bottom line is for some the increases may feel manageable. For others, it’s just one more increase in a long list of rising costs. Honestly, here's the bigger question for residents: are you getting enough in return to justify paying more? Voice your opinion tonight (March 23rd) at the public hearing for adoption of the annual budget in front of the Dubuque City Council at 6:30 PM.