GreekChat.com Forums - Service Fees vs. Property Taxes

So- does anyone have much information on this in practice instead of in theory? I haven't looked too much into this idea in the past. Seems interesting to me. Not sure about non-profits needing to pay- maybe the state legislature would have to pass something exempting them- but I agree that state and federal government properties should pay for services they use like the fire department.

http://tinyurl.com/6624v

Quote:

Fees over taxes urged for D.M.
Eric Anderson's plan calls for nonprofit groups to start paying.

By JASON CLAYWORTH
REGISTER STAFF WRITER
Copyright 2005, Des Moines Register and Tribune Company
January 6, 2005
Des Moines would be the first city in Iowa and one of a handful in the nation to eliminate property taxes under a plan by City Manager Eric Anderson.

Anderson's idea hinges on special fees that residents, businesses and nonprofit groups would pay for police and fire protection and a range of other municipal services.

Des Moines homeowners would save, on average, more than $120 a year, according to one estimate. But nonprofit groups such as churches, schools, hospitals - and state and federal buildings - that are exempt from property taxes would collectively pony up millions of dollars each year.

"It's an interesting idea. Very interesting," said Beaverdale resident Bruce Longstreet. "I'm a church member, but I still think there are a lot of tax-free entities and maybe it's time they start paying part of their expenses."

The transition from taxes to fees would take five years or longer and would first have to clear several hurdles, the largest of which would be legislative. Police and fire services have traditionally been paid for with property taxes, and they account for the majority of Des Moines' $138 million operating budget.

"I'm at least willing to look at it, but I'm not yet willing to say I'll jump on board," said Senate Republican leader Stewart Iverson of Dows. "I'm not opposed to change, but here's the bottom line: I don't want to change the system just so governments get more money to spend."

Polk County has more than $1.3 billion in property that is exempt from taxes, which pushes a greater portion of the burden on families and businesses, Anderson said. Elected officials have blamed the growing list of exempt properties as part of the reason Des Moines' tax rate is among the highest in the state.

"I think it's fair to say the property tax is illegitimate," Anderson said Wednesday. "Now you have corporations that make millions of dollars every year because they're tax-exempt as a nonprofit."

The city collects about $100 million a year from property taxes. The total includes collections from businesses in special districts, said Ron Carzoli, a tax department supervisor for the Polk County auditor.

Carzoli estimates that if all property in Des Moines paid taxes, the city's tax rate would drop from $17.05 to $14.29 per $1,000 of value.

Carzoli said a wide range of unanswered variables, such as how the new fees would be assessed, makes it "strictly a lose estimate." But the tax bill on a home assessed at about $89,000 would be reduced by roughly $120 a year if all nontaxable properties contributed at the same rate as homes.

"It's pretty complicated," he said. "There would be a lot of ways to do it."

Church groups, hospitals and schools have traditionally resisted fees for services. Those exempt properties, however, are frequently among the most frequent users of police and firefighter services, city leaders have said.

The Rev. Jim Kiernan of downtown's St. Ambrose Cathedral points out that nonprofit groups provide key services that would otherwise create additional burdens upon taxpayers.

His church, for example, has helped thousands of refugees, many of whom have gotten jobs and now contribute to society. His church, which is assessed at more than $4.4 million, would pay $30,359 in annual fees, according to Carzoli's estimates.

"It would be a problem," Kiernan said. "To tax a church, a hospital, school or whoever already provides services to the community just adds a burden upon those groups."

Kiernan is the uncle of City Councilman Michael Kiernan, who said Anderson's idea deserves consideration.

"I think all of us have to share the burden and pay for services whether you're a nonprofit or not," he said.

Anderson told council members Wednesday that property-tax breaks and other loopholes make the system "nearly incomprehensible" to the average citizen. A fee system would let them know for what and how much they pay for services, he said.

"Now, under the property-tax system, nobody understands how taxes are calculated, and it's very clear that various groups are treated very differently," Anderson said.

The idea is not to collect more taxes, city leaders emphasized.

"I think it's a revolutionary idea," said Councilwoman Christine Hensley. "I think it has some real potential."

Elected officials from Polk, Dallas and Warren counties are discussing a sales-tax increase that would raise $71.5 million a year and be largely used, they say, to lower property-tax rates. And Des Moines officials for three years have unsuccessfully pushed legislators for a way to charge fees for police and fire services, based on the number of people who use the service from each home, business or nonprofit building.

"I think it's going to be a real struggle to get people to change," Mayor Frank Cownie said.

Moab, Utah, eliminated property taxes for its 5,000 residents in 1992 and now generates a $4.5 million operating budget with sales taxes. The city is near several national parks and enjoys a large number of tourists.

Moab's city manager, Donna Metzler, said the new system has worked relatively well. She worries, however, that a recession could hurt tourism and hammer city finances.

Q. Would Des Moines homeowners continue to pay county and school taxes?
A. Yes. All other taxes collected for the county, Des Moines schools and for other services such as Broadlawns Medical Center would continue.

Q. What portion of all taxes collected in Des Moines goes to the city?
A. Approximately 37 percent. Des Moines schools take about 40 percent of the average property-tax bill, and Polk County's portion is roughly 14 percent.

Q. Would churches be assessed the new fees?

A. Yes.

Q. How soon could a fee system begin?

A. City leaders estimate it will take at least three to five years. The idea would require legislative approval.

Q. Would the move to a fee-dependent city budget require voter approval?
A. Perhaps. Some ideas, such as a 1-cent sales tax used primarily to reduce tax rates, require voter approval. Legislators could require voter approval for certain specialized fees.

Q. Would Des Moines collect more money?

A. City leaders say no. The advantage, they say, would be that costs are more fairly distributed.

Q. How much money would a homeowner save?

A. It is uncertain because key details have not been determined about how the fees would be assessed. Rough estimates show an average Des Moines homeowner would pay about $120 less per year if nonprofit groups and governments paid taxes at the same rates as other property owners.