The Dubuque County Board of Supervisors is preparing to start its annual budget-building process, but it is doing so as the Legislature considers proposals to fundamentally change how local governments are funded.
Leaders of the Republican majority in the Iowa Senate and House of Representatives have promised to continue reducing taxes in the 2023 session. One broad proposal is to control property taxes owed to local governments. Another measure, reintroduced after not passing in 2022, would have the state collect local option sales taxes, then redistribute the funding.
County governments in Iowa must submit their budgets for the fiscal year beginning July 1 by mid-March to meet a state deadline. The Dubuque County supervisors base their budget on estimated tax revenues.
If state lawmakers make tax changes after that deadline, it would cause confusion locally, according to Dubuque County Budget Director Stella Runde.
“They have done that. They just did that with the mental health/ disabilities services funding,” she said of a 2020 law change, by which the state began paying for mental health/disability services, rather than counties. “We just had to somehow adjust.”
Dubuque County department heads and advisory boards are busy developing their budget proposals to present to the Board of Supervisors. Some of them are entering that process with unknowns as well, according to the Jan. 17 meeting.
During a work session, County Engineer Russell Weber offered an alternative funding method for county road construction, in light of the proposed change to local option sales taxes. Those 1-cent sales taxes are established by voter referendums for specific purposes — in Dubuque County, it all goes to road projects.
Weber said it produces $4 million to $5 million to the county annually. He said the state treasurer already predicted $200,000 less in sales tax revenue for the county, after a record year in county investment for roads, drawing down what was a robust cash reserve for that department.
“Ultimately, it’s kind of like an end of an era with what we have been doing the last few years,” he said. “A ($900,000 general fund) transfer could be proposed as an option, to refurbish the fund balance to its previous level or possibly promote projects as desired, in conjunction with the five-year plan. If there was a direction, I could utilize that going forward with the budget presentation.”
Supervisor Ann McDonough proposed lobbying against tax alterations, especially to the local option sales tax, at the Board of Supervisors meeting Jan. 17.
Supervisor Wayne Kenniker, after the meeting, said the supervisors need to remain aware of the tax proposals but only can budget with the current structure in mind.
“In Des Moines, they may do something that changes that and they may not,” he said. “We first and foremost put a budget together with the current information we have and the current regulations. If we try to anticipate what we do, we could be wrong.”
