FREE PRESS REAL ESTATE FOCUSProperty tax rates vary widely across the county

ORIGINALLY WRITTEN DON RATZLAFF
With one foot in the real estate market and one foot in city government, Delores Dalke has mixed feelings about the status of property taxes in her hometown of Hillsboro-and Marion County, too.

As owner of the Real Estate Center and as mayor, she feels a measure of satisfaction that Hillsboro’s tax rate is among the most competitive in Marion County.

But Dalke said she is concerned that when the other taxing entities are figured in-school district, county and state-Hillsboro is still at a disadvantage when compared to most key cities in surrounding counties that vie for families and businesses looking for a place to relocate.

“If you’re a local Hillsboro person and you want to build here, or move up to a newer, bigger, better house, I’m not sure how much time the local citizens spend thinking about (the property-tax levy),” she said.

“However, if you are from outside of our community and you are thinking about relocating here, it becomes very important because our neighbors to the west (McPherson and Salina) and to the south (Newton) all have much lower rates than what Hillsboro does.”

Dalke added that what’s true for Hillsboro is also true for all of Marion County.

“It becomes a real big deal because our county definitely needs all the population we can get,” she said. “We don’t want taxes to be what drives them away.”

Keeping the levy steady

Dalke said the key reason Hillsboro has been able to keep its mill levy in the mid-40s is that its valuation has increased-not only because of higher appraisals, but also growth in new construction and the renovation of existing buildings.

“That has all played in our favor in the past years,” Dalke said. “As Hillsboro has moved forward, we have been able to keep the mill levy level and still have the money we need to function as a local government.

“It’s something I always use when I talk to the council about us keeping our mill levy intact,” Dalke said about the importance of maintaining a competitive mill levy.

The issue is even more accute for businesses.

“The state statute that charges businesses makes the assessed value 25 percent of the appraised value, where it’s 11.5 percent on residential,” she said. “So it’s very dramatic on businesses.”

Other reasons Hillsboro has been able to maintain its mill levy while covering the increasing cost of governing include an economy of scale that comes from being a larger community, as well as being able to generate revenue through its electrical and water utilitles.

But Hillsboro also has taken the lead in Marion County by using sales tax as a “users fee” to pay for capital improvements that often are funded with property taxes.

“We are able to use the money from sales tax to pay for most of the projects under our capital improvements fund, and part of that sales tax is also being used for bond and interest payments,” she said.

For example, the first local sales tax assessed in Hillsboro in the mid-1980s was assigned to pay for streets, sewers and “other capital improvements.”

Earlier this year, voters approved a sales tax increase to pay for the construction of a community aquatic center.

Both philosophical and practical

Dalke said implementing a sales tax as a users tax has a philosophical base to it: all who benefit from capital improvements should help pay for them.

“What happens with property taxes is that only the owners pay them,” she said. “I know that, in theory, you can turn around and pass on those property taxes to the tenants, but in reality does that really happen?

“That is one of the reasons, when the state cut back our funds rather than raise property taxes (last year), we chose to put a surcharge on the electrical bills (instead of increasing the mill levy) because we felt it was more fair to spread the burden of what the state had taken away from us more equally across Hillsboro.

“Everyone who paid an electric bill would be paying something to make up the difference.”

Although she acknowledges the philosophical arguments for resisting property taxes, she cited the practical issues-competing for new home builders and businesses from outside the city-as influencing her more.

“We’ve got to stay competitive,” she said.

Saying no to a county plan

Even so, the City of Hillsboro was one of very few taxing entities in the county earlier this year to opt out of a county-initiated plan to include all of Marion County in a property-tax abatement program. The program would have enabled home and business owners to be exempt from paying property taxes on new and renovated construction for the next 10 years.

“It was a philosophical thing as much as anything,” Dalke said about the council’s decision. “I didn’t like the designation that we were ‘blighted’ (a requirement of the program). That did not feel good to me.”

Dalke said she has no problem with the state’s revitalization program when it is targeted for sectors of a city or county that might fit the “blighted” characterization. In fact, Hillsboro initiated a similar program a few years ago that targeted an older area of the city.

“I have no problem with areas that need revitalization to be part of a program, because that’s why we did one in Hillsboro,” she said. “However, to declare the whole county blighted….

“I think it’s a reputation kind of thing,” she said. “If we are going to grow, I do not believe that businesses go to areas that are considered ‘blighted’ to build their new business and bring their families to live there.

“I think you have to have a positive image in order to bring people to your community.”

Dalke added that even though owners of new or renovated construction in Hillsboro will have to pay the city’s mill levy, they will be exempt from the levy assessed by the school district and the county, thanks to the county’s program.

“It could have a real good effect on somebody who wanted to build a business building that wasn’t eligible for tax abatement under economic development,” she said.

At a recent meeting of the National League of Cities, Dalke said she was struck by the perspective of convention speaker Robert Reich, who was secretary of labor for the Clinton Administration.

“He said one of the worst things you can do in recruiting businesses is to offer them a lot of abatements and try to compete to be the cheapest place to do business, because there will always be somebody who’s cheaper than you are,” she said.

“He said you have to sell your quality of life, you have to sell your school, you have to sell all of those other things that make people want to be part of your area. Just giving things away doesn’t work because there’s always somebody else who will give them more.

“That’s what I believe in. We have to appear to be successful in order to be successful.”

More from article archives
EDITORIAL: Boon and bust
ORIGINALLY WRITTEN DR It’s in times like these that you realize how...
Read More