WATERLOO - Home owners will higher property tax bills next year to avoid cuts in public services.

Waterloo City Council members voted 6-1 Monday to approve a $140.6 million budget for the fiscal year starting July 1, which calls for overall property tax collection to grow by nearly 3.9 percent.

"I believe it's responsible; it maintains our city services," said Mayor Tim Hurley. "We made no structural changes in how we go about our business."

Councilman Steve Schmitt cast the only vote against the budget just as he did last year.

"I'm convinced with a little bit more effort we can get down below where we're at," Schmitt said. "I still think it's a long way from being as good as it could be."

Schmitt noted residential tax bills did not go up under the Black Hawk County budget, while the city of Cedar Falls kept home owners' bills at a 1.7 percent hike. He suggested consolidating services with the county, schools or other cities would reduce the need for a tax boost.

"Our citizens just can't stand any more taxes," he said.

But other council members noted the council held work sessions to find cuts and wound up voting to move the individual department requests on for the final vote.

"Each department was really put under the microscope," said Councilwoman Carolyn Cole.

"This year we did very proper due diligence on this budget, going through line item by line item," said Councilman Bob Greenwood. "I think the levy rate you're presenting us is as conservative as we can go."

Councilman Harold Getty also attested to "cutting and shaving" requests.

"I can buy this (budget) and I think Waterloo people can," Getty added.

The adopted spending plan essentially maintains current service levels and the existing work force. Only one new position was funded - an electrician working out of the Leisure Services Department - and the city cut its contractual electrical services to pay for it.

Overall property taxes grew by $1.4 million, to nearly $38.4 million, with the bulk of the new taxes coming from personnel costs and increased payments on the city's bonded debt. The budget projects 3 percent pay hikes for all city employees, although none of the five union contracts have been settled yet for the next fiscal year.

The city's property tax rate fell from $18.37 to $18.31 per $1,000 of taxable property value.

That new tax rate translates into a 3.1 percent increase in the city's share of the overall property tax bill on residential property, while commercial and industrial properties will see tax cuts of less than a half percent. City leaders can't do anything about the discrepancy between the tax bills on homes and businesses, which is set by state formula.

Under the new tax rate, a home with an assessed value of $100,000 would see city property taxes climb to about $835, a $25 increase. The owner of a $500,000 commercial building would see the tax bill fall about $4 to $9,155; and the owner of a $1 million industrial plant would see taxes cut about $58, for a total of $18,309 next year.

Only one resident, Forest Dillavou, who owns several rental properties, showed up for the public hearing on the budget.

"I encourage you to ask these department heads to shave enough so taxes don't go up on these homes," said Dillavou, noting people are hurting due to the economy and last year's floods. "I urge you not to give the homeowners another tax increase."

But Councilman Ron Welper said more cuts would require layoffs. Some 73 percent of the general fund budget is personnel costs, and 73 percent of the tax-supported services are police and fire protection.

"The revenue is really not keeping up with the costs and demands of the citizens," Welper said. "We're to the point where we can't cut people anymore. We need people to do the work."

Councilman Reggie Schmitt agreed.

"I think we're on the right track with the levy rate going down," Reggie Schmitt said. "We're maintaining the status quo. We're not cutting services. We're continuing to grow as a city."

The new tax rate will affect bills payable in September this year. The city collects about 43 percent of the total property tax bill in Waterloo, with the school district, county and several small taxing bodies getting the balance.

Contact Tim Jamison at (319) 291-1577 or tim.jamison@wcfcourier.com.