WATERLOO -- Homes across the state will be valued slightly higher for property taxing purposes next year.

The 2008 assessment limitation order recently announced by the Iowa Department of Revenue will require residential property to be taxed based on just under 45.6 percent of its assessed value for tax bills in fall 2009.

It's the first time in eight years that percentage, commonly called the "rollback," is higher than the year before. The current residential rollback is 44.1 percent.

"For city budgets it's good news, but it is also too early to celebrate," Waterloo Mayor Tim Hurley said. "Property valuations are the big missing link right now."

The rollback is just one factor in a complex property tax formula in Iowa, which may not necessarily equate to higher tax bills next fall.

Currently, a home with an assessed value of $100,000 is valued at $44,080 for taxing purposes. Based on tax rates in Waterloo, the bill for that home this year is about $1,910.

The same home will have a taxable value of $45,589 next year, assuming no additional changes in value from the assessor. If the city council, school board, county government and other local taxing bodies maintain the same tax rate, the total tax bill would grow to $1,975 -- an increase of $65, or 3.4 percent.

Meanwhile, commercial property, taxed at 99.7 percent of value this year, will pay property taxes on the full amount next year. The rollback on agricultural property will grow from 90.1 percent to just under 93.9 percent.

Dale Hyman, property tax administrator for the state revenue department, said it appears strong growth in agricultural land values is responsible for reversing the downward trend in the residential rollback.

The 1978 law was created to lessen the impact on tax bills due to rising ag and residential property values. It now limits any individual class of property from growing more than 4 percent annually statewide, but it also ties ag and home valuation growth at the same level.

When residential property values were growing across the state during much of the 1980s and '90s, ag land values were not rising at the same rate or were declining. That meant the percentage of residential property value available for taxation had to be pushed downward to stay on par with the ag values.

Hurley is president of the Iowa League of Cities, which has been critical of the rollback law in the past as eroding growth in the tax base. While local governments rely on growing property values to help cover increasing costs of providing services, homes once taxed based on 80 percent of their value 20 years ago are now taxed at less than half their worth.

"The rollback itself is not an out-front issue with the (League of Cities) any longer," Hurley said. "It was when we were advocating some systemic property tax reform.

"It became obvious that any tax code change was a highly charged political issue in an election year," he said. "Then, it became obvious it was a highly charged political issue in a nonelection year. The tax code is very, very complex and antiquated, and it will take firm resolve, political courage and good luck to get it changed."

Currently the league is involved study committees looking at nonproperty tax revenue options for cities, such as franchise fees, user fees, hotel-motel tax increases and others.

There also has been a push from some legislators and business advocates to reduce commercial property taxes, noting businesses pay based on their full value instead of getting the more than 50 percent reduction from the rollback. Cities fear an effort to cut the taxable value of businesses, with a rollback similar to those applied to homes, would result in higher residential tax bills or lost revenue for city services.

"There's a sense in Des Moines and from organizations like ABI (Association of Business and Industry), the Chamber Coalition and others that we have to do something and do it quickly for commercial property tax relief to make ? the state competitive for economic development," Hurley said. "We in the cities are all for that, but not at our expense."

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