Coupled with a sharp tuition increase on the horizon, off-campus students may have to deal with a rent increase next year.

All city residents will pay increased property taxes to make up for sluggish city revenue if the City Council approves the proposed 2002-03 budget at its meeting Tuesday.

“Under the proposed budget, off-campus students may see a rent increase because the property tax bill to Ames landlords will increase,” said Sheila Lundt, assistant to the city manager.

The budget proposed by City Manager Steve Schainker calls for a 5.25 percent increase – amounting to 49 cents – in the overall property tax rate. Pending the council’s approval, the rate will jump from $9.36 for each $1,000 of taxable property value to $9.85 per $1,000.

Residents who own a $100,000 house would pay $985 – up from $936 last year – in property taxes, Lundt said.

According to the proposed budget, the city is faced with a $1,221,805 debt. Forty-one cents of the 49-cent increase in overall property taxes will go to the debt obligation.

Debt bond payments for Ames Quarry and the Southside Fire Station projects account for $774,831 of the debt. Both bonds received overwhelming support in referendum elections last year.

The remainder of the $1.2 million debt covers major improvements to the city, including the overpass over Highway 30 on Dayton Avenue and improvements at the intersection of Sixth Street and Grand Avenue.

Although increased property values would cover the higher costs, the city must deal with a $450,000 shortfall in revenue. The most significant loss is $200,000 from the local options tax.

“The local options tax is based statewide on sales tax receipts,” Lundt said. “Since the statewide receipts are down because of the economy, the state figures the same trend to Ames local tax, so we don’t have as much local option money as last year to help assist.”

Industrial and commercial taxpayers will see a greater increase in property taxes, she said.

“The state of Iowa provides a rollback on residential taxable values and [a] very small amount on commercial,” Lundt said. “This rollback is just like at Wal-Mart. The state cuts the amount of dollars the city can tax. Because the rollback is less, industrial and commercial taxpayers

will have to pick up more of the increase in tax dollars than residential taxpayers.”

In addition to the loss of revenue and the debt obligation, Ames residents are throwing away more garbage, and the city will charge more to remove it.

In the budget, the city manager recommended an option that moves the majority of the increase to garbage contractors, which haul the garbage away from houses.

The contractors would more than likely increase their rates to landlords or individual renters or owners, Lundt said.

“If students have to pay for garbage collection, they may see higher costs for garbage pickup,” she said.

The new budget does not call for a increase in utilities such as electricity, water and sewage.

Ames Mayor Ted Tedesco said the council is approaching the decision on the budget with care.

“The city manager has worked very hard to propose the budget,” he said.

“The city of Ames has had a history of being one of the lowest of the largest 14 cities in the state in property tax askings. It will cause both the staff and council to exercise due diligence.”

The city’s general fund, which covers general government programs such as police, fire, legislative, library, parks and recreation and public buildings, has increased $600,000. Tedesco said the debt increase could be lowered by funds set aside each year in anticipation of an economic downturn.

“There’s the possibility that the council could desire to use fund balances that were created for emergencies,” Tedesco said. “It’s very probable. The council will try to relieve as much pressure as possible.”

The city manager’s office recommends the council use the emergency funds “sparingly,” Lundt said.

Maintaining adequate fund balances makes it easier for the city to obtain bonds with lower interest rates, she said, which saves taxpayers money.

The budget will not be final until the council votes on it Tuesday, Lundt said.

“The city council is seeing the budget for the first time as a whole in the budget hearings,” she said. “They’ll propose any changes next week when they vote. It depends on whether the council sees this as an emergency.”