Impact of Iowa ‘backfill’ dollars on cities, schools and county

Last September, Iowa Governor Kim Reynolds authorized a transfer of $13 million from the state’s economic emergency fund to cover a $14.6 million discrepancy between the state’s revenues and expenditures (the state currently has an ending balance of $1.6 million for fiscal year 2017). Coupled with former Governor Terry Branstad’s borrowing of $131 million during the first half of fiscal year 2017 to cover the state’s mid-year expenses, the state has borrowed approximately $144 million to cover budget shortfalls, which had already seen approximately $118 million in cuts ($18 million to the Board of Regents and $3 million to community colleges).
With $20 million due on Branstad’s loan in 2018, as well as financing the state’s functions on lower than anticipated revenues, the state of Iowa is entering into a complicated financing situation, placing many programs that curtail expenditures as well as increase revenue, on the table for negotiation. One of those programs is the state’s obligation to pay the difference in property taxes following the bipartisan property tax relief bill in 2013.
Known as “backfilling,” in 2013, in order to lower the property tax on corporate, industrial and railroad properties from 100 percent, to 90 percent of valuation, the state agreed to pay the money lost from that tax revenue, proportionately, to Iowa’s cities, schools and counties. According to the Des Moines Register, those payments total approximately $152.1 million, across the state, annually.
Read the full story in the October 18 edition.