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Cedar Rapids, Iowa 52401
Iowa House committee advances property tax reduction bill
Schools worry about changing when bond votes held
DES MOINES — Iowa lawmakers are closing the gap on dueling proposals to lower Iowans’ property tax bills after a House committee advanced a property tax reduction bill Thursday.
The bill, in most cases, would prevent a residential or agricultural property tax bill from increasing more than 3 percent over the preceding year, while a commercial or industrial property tax bill could not increase by more than 8 percent. Improvements or new constructions on a property, though, could lead to a higher tax bill.
The bill, House File 1, passed the House Ways and Means Committee unanimously with support from both Republicans and Democrats.
The bill would not affect property assessments, but instead require local officials to lower a person’s property tax bill if the total tax bill is more than 3 percent higher than the previous year.
Property owners across the state are seeing sharp increases in the assessed value of their properties this year — an average of 22 percent across the state — owing to a hot real estate market and rising property values.
“This is centered around your increase for your actual bill, which is designed to give the taxpayers not only predictability, but also stop the bleeding for continually increasing property tax bills,” said committee chair Rep. Bobby Kaufmann, R-Wilton.
The bill also would lower by a dollar a property tax that funds public schools — from $5.40 to $4.40 per $1,000 assessed values for most schools — and direct the state to make up the $204 million difference.
The amendment gets rid of a proposal in the original bill that would have required a school or local government to put down 10 percent of the cost of an improvement project before holding an election to borrow money. Instead, it would require that a vote on a school or local government bond issue be held during a general election — in November on even-numbered years.
Local governments also would have to provide property taxpayers with an itemized list of what goes into their property tax bill.
Dems on board
Rep. Dave Jacoby, D-Coralville, the ranking member on the Ways and Means Committee, said he was pleased to see some items Democrats support being in the bill. He said the bill would lower property taxes for middle-class taxpayers, something Democrats have said is a priority.
“Everyone's seeing huge valuations jump,” Jacoby said. “We do not want to see any artificial means of suppressing values of Iowans' homes, but we do believe that there has to be some limits on the increases for people's property taxes.”
Jacoby said his one complaint with the bill is the local bonding rule. He said the decision is better left to local governments, and the bill would affect plans some governments already have in progress for bond votes.
‘Limitations would not be good for schools’
Cedar Rapids School Board President David Tominsky said Thursday school leaders work hard on what to put in front of voters in a general obligation bond referendum.
The school board is considering a $312 million bond referendum to fund 10 years of improvements to its middle and high schools. If the property tax bill passes and is signed into law, that question could not go on the ballot until November 2024.
"Obviously, the limitations on that would not be good for schools across the state," Tominsky said. "We're going through our process. It's a lengthy process to go through.“
Often, when a school district puts a bond referendum to voters, the time to act is "right now, it's not in two years," Tominsky said. "That's a lengthy time to wait."
If a school bond fails, it puts schools in a tough spot. The proposed law would make it even tougher, Tominsky said.
"Today, when a bond fails, you can evaluate what led to its failure. It's important for communities across the state to have more of that local control on what's the right time to put that in front of voters," he said.
Janelle Brouwer, superintendent of the Marion Independent School District, said school districts, when considering a bond referendum, must consider facility needs, timing, availability of funds and interest rates.
“By limiting the time in which a district must hold a bond referendum, there is concern with delaying necessary facility improvements as well as limiting the district’s ability to make financial decisions based on election timelines rather than fiscal responsibility,” Brouwer said.
Currently, school districts can take general obligation bond referendums to voters multiple times a year. If the measure fails, they have to wait at least six months to take it back to voters.
Les Finger, chief financial officer in the Iowa City Community School District, noted some school districts try four or five times get a bond issue passed. Having to wait two years before again asking voters for approval would “make it really difficult to provide appropriate facilities to educate students,” he said.
J.P. Claussen, an Iowa City school board member, said school bonding is an "important mechanism of local control."
Iowa City schools last passed a bond in September 2017. At the time, the $191.5 million bond proposal was the largest ever proposed in the state. It passed.
"We brought our facilities up to date and put things in place to get kids ready for the 21st century," Claussen said.
Lisa Williams, vice president of the Iowa City school board, said she doesn't know why Iowa lawmakers are trying to "limit" a school district's ability to put a bond issue on a ballot.
"Right now, you have to wait six months to put (a school bond referendum) back on the ballot. Stretching that out to 24 months is really going to impact a school's ability to plan. Extending that timeline just seems bad,“ she said.
Senate proposal
The House bill still has key differences from legislation proposed in the Iowa Senate to lower property tax bills, but leaders of both chambers’ tax committees said they are getting closer to an agreement.
“Conceptually, we’re getting closer and closer to being on the same page,” Kaufmann said. “It’s just a matter of working out the mechanisms.”
The Senate bill, Senate File 356, is intended to lower tax bills by restricting how much a local government can tax, depending on how much total taxable value in the city or county increases.
Sen. Dan Dawson, R-Council Bluffs, the Senate Ways and Means Committee chair, said whatever bill lawmakers land on will need to result in lower property tax bills than those anticipated as a result of the spike in property assessments this year.
“We have to make sure that when we walk out of here, that we have built mechanisms in our systems that can protect the property taxpayer for what they received in their assessment letters,” Dawson said.
Gazette reporter Grace King contributed to this report.
Comments: cmccullough@qctimes.com
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