The Iowa Legislature has made a change to a funding stream that some local governmental entities depend on for possible shortfalls in their respective budgets.

The Legislature has determined to phase out the commercial backfill funding for counties and cities. Currently the backfill is at 90-percent taxation for commercial properties, with the state making up the final ten-percent. The phase out will happen in the next 6-8 years and Jefferson City Administrator Mike Palmer shares his thoughts on the phase out of the commercial backfill.

“The City, up until this year, never really counted on that backfill money anyway. We’ve been working around that knowing that it’s going to be reduced. As it’s reduced each year, we’re hoping by just maybe five or ten-percent, it gives us more of an opportunity to adjust to that revenue issue.”

Going into the next fiscal year that starts on July 1st, the City is anticipating $90,000 to be backfilled by the state, and Palmer points out it was confirmed that the state will pay that backfill amount. Palmer talks about another funding aspect the City could utilize to make up for that potential shortfall in the future.

“One of the things that we’re seeing trending is the property valuations are going up. We have more to draw on. The downside is that were we to anticipate that the tax rate would go down with the higher valuations. The tax rate might end up staying a little bit more of where it is right now without going down.”      

Palmer is confident that given enough time, no departments or personnel reductions, due to the backfill being phased out.