Supervisor addresses tax rate hike

Complicated issue

This is just basic information as the total Lee County Budget is very complicated with monies flowing in and out. It is possible to maintain a stable levy if the increases in assessments equal the inflationary and operational costs encountered during a given year.”

Garry Seyb, Lee County Supervisor Chair

LEE COUNTY - Lee County Board of Supervisor Chairman Garry Seyb has issued a narrative around the spike in taxes that county taxpayers are seeing in their bills for the fall payments.
The tax statements came out in the mail last week and not only frustrated residents with the amount of the increase noted on the county's levy, but also in the way the statements came in the mail.
The statements have a large window that actually show the amount of each person's tax bill. Seyb said the county contracted the work and, in trying to save money and resources by having someone else do the mailing process, they didn't realize that the amount of the tax would be showing.
"We were trying to be wiser with the cost of producing the statements and we didn't know that they would be mailed that way," Seyb said. "We'll learn from that."
The bigger issues was the increase in the amount of the county's tax ask. Seyb said the increase, which was 31% compared to the 2023 Fiscal year number, is a caibration from previous boards' decisions to not raise the levy when it was actually needed.
Seyb said his statements aren't representative of the board, but his views of how the tax levy had to be ramped up this fiscal year.
"This is just basic information as the total Lee County Budget is very complicated with monies flowing in and out. It is possible to maintain a stable levy if the increases in assessments equal the inflationary and operational costs encountered during a given year," Seyb wrote in the document sent to Pen City Current Friday.
The document in its entirety is reprinted below.
Facts: On May 1st, 2023 a resolution was passed to approve the FY2024 Budget (July 1, 2023-June 30, 2024). This budget set the FY2024 levy rate at 13.53266. This represented a 31% increase over the previous FY23 rate of 10.32445. The resolution passing the FY2024 Budget was passed unanimously with a 5-0 vote of all Supervisors (District 1 – Fedler; District – 2 Schultz; District – 3 Holmes; District – 4 Seyb; District – 5 Pflug)
Bottom Line Up Front: During this last year FY23 (July 1, 2022-June 30, 2023) Lee County would have run out of General Fund (GF) money to operate by the middle of July 2023 without the emergency use of two million dollars in American Rescue Plan Act (ARPA) money. This money was re-allocated by the Board of Supervisors (BOS) from the Lee County Health/EMS building to the General Fund. (ARPA funds are one-time funds not available every year. In other words, these funds will not be available for our current FY24 budget)
Reality: The previous FY23 Levy rate (10.32) would have to be raised to (13.53) in FY24 or the county would have to cut services and have massive layoffs across multiple departments to make up the difference.  Lee County requires a “Carry Over” balance in the General Fund of approximately 3 million dollars to be considered healthy and it would not exist without the 31% increase. The “Carry Over” balance pays for all bills to operate the county from July 1st until we begin to receive tax payments in September. We have to end the Fiscal Budget year with enough funds to “carry us” until tax payments come in.
How did we get to this point?
It is my opinion that there were several indicators over the last decade that should have caused previous Boards of Supervisors to incrementally raise the levy rate. In an effort to keep the levies as low as possible for the taxpayers, this was not done. The ultimate effect of this was the deterioration of the General Fund leading to its eventual collapse this last FY23 ending June 30, 2023.
What has been the levy rate over the last decade?
2013 – 10.89, 2014 – 10.45, 2015 – 11.29, 2016 – 10.89, 2017 – 10.38, 2018 – 10.38, 2019 – 10.38, 2020 – 10.38, 2021 – 10.67, 2022 – 10.25, 2023 – 10.32  The average rate is: 116.28/11 = 10.57
This means the average levy rate for FY23 ending June 30, 2023 was 25 cents less than the 11-year average.
Key Budgetary Moments:

1. In FY20 the private ambulance company became insolvent at one point not able to make payroll. They agreed to stay on during the FY21 year so the county could start up a county-funded ambulance. However, they required a $500,000 increase in funding. (No raise in GF levy)
2. On July 1, 2021 (FY22) the newly established Lee County Ambulance stood up at a projected cost of $4.5M dollars. The best information obtained was the ambulance would have an annual revenue of $2.5M; leaving approximately $2M to fund through the General Fund. (No raise in GF levy)
3. FY22 Ambulance Revenue came in at $1.3M; creating a shortfall of $1.2M. (No raise in GF levy)
4. FY23 Ambulance Revenue came in at $2.2M; creating a shortfall of $300K. (Note: I believe the ambulance will exceed revenue projections in FY24. They will now qualify for additional Medicare/Medicaid paybacks not previously qualified for in FY22/23)
5. In FY21 a Pioneer Commission was created after discovering that the county is required to have and fund a commission to maintain cemeteries that have had 12 or fewer burials in the last 50 yrs. The commission was provided funding in FY22 at $40k annually. They do have their own levy rate of approximately .024.
6. In FY22 the Lee County IT Manager resigned, and a new director was approved to be hired. This caused a closer look into our county IT support. The board approved a team from across the state to come in and assess Lee County IT infrastructure/operations. The assessment provided to the board was to say the least an eye opener necessitating a restructuring of IT and creating an IT Department. Existing IT funds (approximately $350k) that were broken out into individual departments were pooled together and placed under the control of the newly appointed IT Director. These funds were insufficient to meet the recommendations as outlined by the State IT Team. A total of $1.1M was provided to the IT department or a $750K increase expenditure to the General Fund. (No raise in GF levy)
7. In September of 2022, Chairman of the Board Matt Pflug focused all county supervisors on the General Fund balance that had dipped consistently below 1.5 million dollars.
8. On October 1st, Keokuk Area Hospital notified the public that the hospital would be closing. This created a requirement to add an additional ambulance and 9 EMTs to the fleet to meet critical response times throughout the county. This created an immediate unbudgeted expenditure of $750K in the middle of a year. (Some of this cost was offset with one-time OPIOID payments that had been received from a settlement)
9. Inflationary Costs Over the last DECADE – None of the above consider inflationary costs of such things as: heating/cooling, insurance, fuel, maintenance, etc. (No raise in GF levy)
10. Declining population over the last DECADE – Less people in the county; less revenue. (More people in county paying taxes costs less for each taxpayer. Conversely less people in county costs more per taxpayer)
11. Staffing Costs: Salary and Benefits (No raise in GF levy over the years.)
    3. The 12-year average salary increase for all employees in the county is 3.18%. This includes the 10% raise given in FY23.
    4. According to the Bureau of Labor statistics average inflation between 2012-2023 is 2.36%.
    5. This means, at best, employees have seen an average increase when adjusted for inflation of .82%. However, this does not consider any adjustments to health insurance increases to be paid by employee that effectively eliminates the raise given.
    6. We must take care of our employees so they can take care of you.

My Vision for the Future
The Lee County Board of Supervisors (BOS) has already begun to take steps to reduce the massive increase this year that was required to make the General Fund Healthy. As stated before, the only two ways to reduce the levy is to cut expenses or find additional revenue.
Cost Savings (Cuts):
Building Review Committee – After discussions with the Lee County Farm Bureau in February of 2023 a question was asked how many buildings/properties the county owns? In attempting to answer the question for the Farm Bureau meeting it was determined that the county owns multiple buildings, some of which are currently being rented out. The Board of Supervisors (BOS) formed a building review committee to review all buildings/properties owned by the county and make recommendations to the full board. We currently have several buildings identified that we are looking at transferring to other entities relieving the county of the responsibilities of maintenance and insurance costs. (General Fund Savings)
Consolidation of Courts – During the 2023 State Legislative session there was an amendment that would have allowed by a simple majority vote of the Lee County Board of Supervisors to name a single county seat. This would have cleared the way to consolidate the courts (just the courts) into a single courthouse. The amendment was removed at the last minute from the property tax bill. I have already approached some of our and other legislators requesting that the amendment be re-introduced, passed, and signed by the Governor. Should this take place during the 2024 Iowa Legislative session, the BOS could take action to reduce our court to a single courthouse. This would save us heating/cooling, insurance, maintenance, security officer, and allow for consolidation of our attorneys into one location. With the consolidation of the attorney’s office, we would be able to sell the building across the street the county owns again saving heating/cooling, insurance and maintenance costs. Additionally, both these building would be back on the tax rolls providing additional revenue. THIS WOULD NOT AFFECT ANY OTHER SERVICES PROVIDED IN FT. MADISON.
Review of Department Operations – We are constantly reviewing all operations across departments for efficiencies and areas where we, as a county, maybe have staffing that are under utilized or providing services that could be absorbed by private business. I do not want to set any expectations of major savings in this area as I do believe that our Department Heads do an amazing job of controlling costs. There are some areas that we are statutorily required to have, but if we identify cost savings the cuts will be made.
Additional Revenues:
Investment Opportunities – Credit here goes directly to our Lee County Treasurer Becky Gaylord and her team. Becky asked a question sometime late Spring of 2023; could she invest county funds into short-term interest-bearing accounts?  After doing some research and checking with the state auditor’s office, it was determined that; yes, she could!!! By asking this one question and following through, the Lee County General Fund is seeing monthly interest payments from the money that is invested in the tens of thousands. We are on pace to see over a million dollars in the General Fund from interest payments.
Speed Cameras – I know the speed cameras have had varying degrees of support. I am not going to discuss pros/cons of the practice, only how the funds generated may be used. The speed camera fines will be maintained in a separate interest bearing (Automated Traffic Enforcement Camera – ATEC) account from July 1st to March 31st each year. At the beginning of the 4th quarter, 25% of whatever funds are in the ATEC Account will be transferred into the County Reserve/Emergency Fund (CREF), which will also be an interest-bearing account. Of the remaining 75%, there are allocations equaling 12% going to departments within the county that are involved specifically with our highways, effects of speed, or the application of the speed camera program. There is an additional stipulation paying for all Lee County students enrolled in drivers’ education. All remaining funds may be allocated for county purpose by the Lee County BOS. Any funds not allocated by May 31st will be placed into the CREF account. July 1st the fund begins to grow again following the same process. We will not know how much revenue will be generated. That is the reason for the percentages. If no one speeds; no money. Best guess revenue is estimated at $1Million. This revenue is unique in that we can grow the CREF account so as to be prepared for future unforeseen emergencies thereby not putting stress on the General Fund when things come up as they do. To get funds out of the CREF account takes a super majority vote of the Lee County BOS; meaning 4 out of 5 would have to agree.
Population:
We have multiple organizations across the county working on economic development and encouraging growth in Lee County. We have a lot of hurdles to clear before we see any real growth in population. We must first slow the exodus from Lee County and then encourage others to join us. There are real challenges and, yes, I realize the large tax increase this year does not inspire growth. But we must get on solid footing before we can grow. There are currently initiatives that need to improve such as childcare, housing, generational poverty, and drug use.  We are working on it. Opioid funding from a national settlement is expected to total as much as $2M over the next 15 yrs. The Lee County BOS will have to determine the best way to utilize these funds to address opioid abuse.
Conclusion:
It is my sincere hope that I have conveyed to you, the taxpayer, the major budgetary struggles the Lee County Board of Supervisors have had to struggle with. I know this in no way lessens the blow of a 31% increase in rates. However, I hope you do know that we, as a board, do not take the decisions lightly.