Opinion ID: 1834498
Heading Depth: 3
Heading Rank: 3

Heading: Transfer of Taxing Authority

Text: Iowa Code section 331.261(8) provides that the community commonwealth charter must contain [a] formula for the transfer of taxing authority from member cities to the community commonwealth governing body to fund the delivery of regional services. The Board asserts that this section required the Commission to place a precise mathematical formula in the charter. The Board further points to sections 331.261(7), 331.263(1), and 331.263(2) as evidence that 331.261(8) requires the inclusion of a precise mathematical formula. Specifically, the Board refers to section 331.263(2) which states, in part, that [t]he governing body of the community commonwealth shall have the authority to levy county taxes and shall have the authority to levy city taxes to the extent the city tax levy authority is transferred by the charter to the community commonwealth. The Board further points out that other statutes, when referring to formulas, refer to a specific mathematical representation. The Commission responds by arguing that we should read the reference in section 331.261(8) to a formula as merely requiring a method or process by which cities will transfer taxing authority to the commonwealth. The Commission asserts that since the charter does include a system for the transfer of taxing authority, this satisfies the requirement of section 331.261(8). Formula is not limited in definition to a group of numerical symbols. In fact, both parties in their briefs note that one definition of formula is a conventionalized statement intended to express some ... principle esp[ecially] as a basis for ... action. Webster's Third New International Dictionary 894 (1993). Article VII of the Charter provides a detailed methodology for the transfer of tax authority from the cities to the commonwealth. First, the Commonwealth Council, Mayors' Commission, city council of a member city, or group of commonwealth voters may identify a service for proposed transfer. If the Mayors' Commission decides that transfer of this service will meet the Article VII, section 1 efficiency goals, it then initiates a study of the service. Article VII, section 5 provides numerous factors which the Commission must analyze in determining the tax levy necessary to support the service. If the Commission decides to recommend the transfer of the service, it must present the report along with a resolution of transfer to the Commonwealth Council. The resolution must include [t]he property tax levy that the Commonwealth Government will levy and the fees and other sources of revenue it will utilize for each Member to deliver the service area for the initial fiscal year. If the Council accepts the resolution, the charter requires that the tax levy for the first fiscal year for delivery of the service will be that included in the resolution. After the first year, the Council estimates the cost and levy required to fund the service. Article VII clearly establishes a formula for the transfer of tax authority from the cities to the commonwealth. As the district court properly noted, in the context of a new form of government, a precise mathematical formula would be impractical if not impossible. Section 331.261(8) does not require a reduction of the methodology to a group of numerical symbols. The extent to which the proposed method may impact city credit ratings or tax rates is an issue for citizens to decide at the voting booth.