Despite claims of inflation fears, the data shows city and county budgets have been outpacing inflation for years.
An Axios Des Moines article about recent property tax reforms really caught our eye. In the article, a handful of city and county leaders in Iowa were lamenting new changes to Iowa law meant to rein in the growth of property taxes. One city manager claimed changes wouldn’t allow cities to keep up with inflationary pressures. The problem with that point of view is that for the past couple of decades, cities haven’t been merely keeping up with inflation, they’ve actually far exceeded the combination of inflation and population growth, as the following chart illustrates.
Cities aren’t alone in their worries. A county leader voiced concerns, too. As it turns out, counties have outpaced cities when it comes to the growth of property taxes.
We suspect that there are numerous cities and counties in Iowa that have moved beyond fulfilling the essential roles of government and now have trouble discerning between wants and needs. Doing so over the course of many years compounds the growth of local budgets to the point that trying to slow down that growth brings cries that the sky is about to fall. One mayor who oversees a budget that plans to spend more than $500 million even seemed to imply his city wouldn’t be able to fix the potholes anymore.
And here’s one other thing to ponder: cities and counties often have reserve funds they can easily tap into. These reserve funds (technically the general fund’s unassigned fund balance) have been built up by budget surpluses over the years and some have reached staggering amounts that exceed a whole year’s worth of expenses. Instead of extracting more money from the taxpayer, local governments should think about using what they’ve already collected.
While it should be encouraging to hear government leaders acknowledge the challenges inflation brings to budgets, we wish they would consider the budget of their taxpayers. After all, it’s the citizens and businesses in their communities that have to pay for their spending growth. When prices at the pump, in the grocery aisles, and so many other places are already taking their toll, it’s not unreasonable for elected officials to think about what taxpayers truly expect from them, find efficiencies, and determine where to hold the line on their spending.