Iowa Senate advances proposal to reduce property taxes

Iowa Senate Republicans advanced a bill Tuesday aimed at simplifying and reducing property taxes that representatives of Iowa’s public schools, cities and counties warn will lead to public service cuts.

Lawmakers held a subcommittee hearing on Senate Study Bill 1124 by Sen. Dan Dawson, R-Council Bluffs, who chairs the Iowa Senate’s committee on tax policy.

Dawson’s bill would cap cities’ and counties’ general property tax levies and reduce the value at which properties are assessed. The bill consolidates property tax levies that fund local government operations, and requires all city and county governments to operate under general levy rates on property tax assessments set in 1975, while providing some exceptions, plus a yearly growth rate to account for inflation.

The bill also phases out the Public Education and Recreation Tax Levy used by schools for items like new playground equipment, before- and after-school programming, summer school programming, adult education and community swimming pools. Dawson said those items can be funded through local option sales and services tax for school infrastructure.

“Iowans want quality services for the property taxes. Iowans have also said their property taxes are too high and the system is stacked against them, and they want a better seat at the table,” Dawson said.

He called the bill and others tackling property tax policy a “blueprint” meant to spark “a constructive conversation” to make the property tax systems “better and fair for the taxpayers.”

“The study bill before us today is the first part in reforming our system, repairing our levy system and addressing head-on the massive assessment spikes that our homeowners and business owner will see in their assessment letters coming in the mail starting next month,” Dawson said.

Mayors, city administrators, county supervisors, county sheriffs and public school officials said the bill undermines local control and hinders their ability to respond to the needs of their community.

Davenport Mayor Mike Matson, chair of the Metropolitan Coalition that represents Iowa’s largest cities, including Cedar Rapids, said the bill limits the ability of cities to capture new tax growth to pay for basic services, discouraging a city from growing.

Bondurant City Administrator Marketa Oliver warned the bill will hamstring the state’s effort to attract and retain a quality workforce if communities are unable to pay for the amenities and safe streets residents want and expect. Oliver said the bill would cause the city to lose the equivalent of 42 percent of its law enforcement budget.

Taxpayer advocacy groups, the Iowa Farm Bureau, Iowa Association of Realtors and Iowa Business Council argue property tax collections in the state have increased well beyond inflation and population growth.

“Taxpayers are having to make tough decisions every single day when they’re going to the grocery store or pay their kids child care bills,” said Victoria Sinclair with Iowans for Tax Relief. “It’s time that our cities make some tough decisions and start cutting taxes for these folks. … Frankly, our state Legislature and our governor have done a great job of keeping (income) taxes low and have lead by example. Now, they’re asking subdivisions of the state to do the same.”

Sen. Pam Jochum, D-Dubuque, called for a broader discussion that might let local governments “diversify their revenue streams so, perhaps, we can reduce local governments’ reliance on property taxes” to fund police, fire, emergency services and other functions of local government.

“I believe if we really want to reform our property tax system in a meaningful way and simplify it — make it more transparent, more responsive to the needs of people — that we need to do it very thoughtfully,” Jochum said.

Sen. Carrie Koelker, R-Dyersville, noted that when lawmakers moved mental heath care funding from local property taxes to the state, some counties did not pass those saving on to taxpayers.

“I love our local governments. I know you all work diligently, but we’re continuing to hear with Iowans coming to us asking for help and that’s why we’re all here,” Koelker said. “It’s going to be turbulent waters, but I’m happy to sign this out today, because the conversation needs to continue.”

House Republicans have also proposed different ways to reduce property taxes.

Comments: (319) 398-8499; tom.barton@thegazette.com