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Median Income and the Tax Burden

November 11, 2014
Emmetsburg News

Letter to the Editor:

Kirk Haack, in his letter to the editor, states that it is important to understand the "large story" regarding property tax assessments and rates. Although he provides some useful information, he still fails to tell this large story. First, I should clarify a small point. Mr. Haack notes there are taxing authorities other than the city, such as the county, school district, etc. Of course there are, but our focus here pertains strictly to the city portion of the property tax burden. Next, he states that the property tax base (sum of assessed values) is determined by the county tax assessor, working within guidelines set by the state. This is true and I have no problem with the assessor. However, Mr. Haack seems to absolve the city of having any input regarding overall property tax burdens, where this simply is not accurate.

Property assessments in Emmetsburg are very high compared to surrounding cities and although the city does not determine the assessments, it benefits enormously from them. The respective tax rate is computed as a dependent variable by dividing the expenditures of the city by the total of assessed property values. Thus, the city does not directly set a tax rate, but does so indirectly through its spending level, which brings me to the main point. The city could ease the tax rate and tax burden on its residents if it would spend less, especially on highly speculative recreational projects, and spend only on the necessary essentials such as streets, sewers, etc. Of course there are also unexpected expenditures, but this holds for all cities.

Mr. Haack correctly notes that for a fixed level of spending high assessments lead to low tax rates. However, the same cannot be said for the average household tax burden, which can be defined as the tax rate multiplied by the mean housing value. Using data obtained from sources, and the Iowa Department of Management, I computed the mean household tax burden for Emmetsburg, other cities in our county, and comparable surrounding county seats such as Spencer, Algona, Estherville, and Pocahontas as well as a number of others. The data were collected for 2011, the last year it is available in its entirety. My findings are that the residents of Emmetsburg face a higher tax burden than any of those mentioned. Although tax rates have fallen somewhat for Emmetsburg, due to rising assessments, they have not declined nearly enough to significantly ease the actual tax burden.

The reasons are the high assessments and more significantly, the high level of city spending, which keeps the rate at a high level. In summary merely looking at tax rates, such as those posted in city hall, is very misleading, for they do not tell the whole story.

I must note that there is an additional side to this whole story. Sadly, Emmetsburg is a very low-income town. The median household income in 2012 is only $35,492, well below comparable towns and county seats. For example, Spencer, Algona, Estherville and Pocahontas are $44,872, $46,677, $41, 677 and $37,187, respectively. As the state median income is $50,957, there are obviously many other examples for comparison. Equally as disconcerting is the fact that the median household income for Emmetsburg is hardly growing. In 2000, it was $31,520 growing by only $3,972 to $35,492 in 2012. By contrast, over the same period, the median incomes in Spencer, Algona, Estherville and Pocahontas increase by $11,902, $14,470, $10,353 and $6,301, respectively.

In summary, Emmetsburg has nearly the lowest median income of any comparable city in the region, yet the highest average tax burden. In my opinion, there is a connection. To make Emmetsburg grow and prosper the city needs to stop impoverishing its citizens by spending so much of its public money on non-essential projects. The objective statistics indicate that the city of Emmetsburg is being grossly mismanaged.

(signed) Stephen A. Mathis, PHD

Emmetsburg, IA



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