Public transit is a public service just like roads, parks, libraries and emergency services that are available to all of us.
Every resident may not use all of these services, yet they still play a key role in how our communities and region function, and how we improve the quality of life for central Iowans.
DART connects people to the places they need to go in and around Greater Des Moines including jobs, healthcare, childcare, education and more. By making our neighborhoods and communities more accessible and easier to navigate, we can support even more local economic activity.
DART Funding: The Basics
DART is supported by a mix of federal, state and local funding dollars. This funding, enables DART to provide a viable, working transit system that provides up to 4.5 million trips per year for central Iowans.
DART is uniquely funded when it comes to public transit agencies, relying on property taxes from its 12 member communities to cover more than 60 percent of its operating expenses.
DART’s governing body, the DART Board of Commissioners, is focused on reducing DART’s reliance on property taxes to provide a more diverse and sustainable source of funding for public transit in central Iowa.
How does the property tax levy work?
The Iowa Legislature created DART in 2006 and the DART Board of Commissioners was given authority to collect a transit levy from residential and commercial taxpayers in member communities.
DART’s other sources of revenue have restricted growth opportunities, which furthers DART reliance on property taxes to absorb any losses in revenue or increases in costs.
Currently, DART’s levy rate is capped at $0.95 per $1,000 of taxable valuation. The cap is based on the rate the state established 30 years ago for city-operated transit systems that had access to additional levies. DART does not have access to other levies that cities who also operate public transit traditionally do. Most public transit agencies around the country are supported through other means such as local appropriations, sales taxes, vehicle registration, car rental fees or other dedicated sources of funding.
DART’s Commission is always evaluating how to make the levy arrangement better for member communities and continue to support a robust transit system. Toward that end, the Commission recently adopted a new property tax formula.
How does the new property tax formula work?
Prior to July 1, 2021, the property tax levy was increased across-the-board at the same rate for all member communities. In 2019-2020, DART’s Board of Commissioners went through an extensive process to update DART’s property tax formula to align cost and benefit for each member community. The new property tax formula more closely reflects the level of service each community receives.
Under the new formula, most member communities’ levy has gone down, while the largest urban areas saw increases that match the higher service levels available in those more populated areas. The Commission approved a multi-year phase-in to ease the transition.
During this effort to update the property tax formula, the DART Commission determined property taxes are not a viable long-term funding source for DART. They voted to seek assistance from the Iowa Legislature to diversify DART’s revenue and find another revenue source that would replace or reduce the transit property tax levy.
DART is actively seeking input from interested parties on alternate funding sources. The goal is to find alternatives that can gain legislative support and lower the property tax burden for member communities while preserving the essential services that DART provides.
- During the 2021 legislative session, DART made progress on a local option hotel/motel tax for public transit that would provide significant property tax relief for DART member communities.
- The proposal passed the Senate and was included in the Governor’s compromise tax proposal. While it didn’t make it into the final tax bill, legislative leaders have indicated a willingness to work to advance a transit hotel/motel tax during the 2022 legislative session.
- The legislation would require a regional transit district, like DART, or a transit system operated by a city to seek voter support to implement up to a 5% hotel/motel tax in exchange for dollar-for-dollar property tax relief and a permanent reduction of the property tax cap.
DART continues to evaluate the proposal and work with policymakers toward funding diversification.
At a time when our region is expected to grow to nearly one million residents by 2040, DART is hopeful in finding support to diversify its funding structure away from a heavy reliance on property taxes. Additionally, DART is constantly working to evaluate its systems and services and make adjustments that provide the most appropriate mobility options for our region in the most efficient and effective manner possible.
All central Iowans benefits from public transit, whether they ride transit or not.
By all chipping in, we're ensuring that central Iowans can access the places they need to go to achieve their potential. This in turn supports thriving businesses, a strong economy and a better quality of life for all of us who call Greater Des Moines home. Learn more at https://ridedart.com/transit-benefits