A big tax deal that could have been bigger

Our Legislature, it seems, is close to a big deal on slicing property taxes paid by businesses.

There's going to be much written about what's in the mix - $350 million in tax relief, state money to offset some revenue lost by local governments and likely a new limit on property tax growth. Details remain fluid. And, of course, the whole thing could still fall apart. The sands may be shifting even as I type.

But I'm reasonably sure what won't be in it. And that's any attempt to loosen the revenue straitjacket worn by local governments that makes any attempt to significantly alter or reform property taxes a mission, virtually, impossible.

Before this deal, local governments were overdependent on property taxes to operate. When the dust settles on this “historic” moment, nothing really will have changed. The dependency and all its consequences will remain.

The state's apparent strategy, rather than deal with the underlying problem, will be to throw wads of money at local governments in an attempt to fill the gaps left by the big tax cut. It clearly won't be enough, so strategy No. 2 is to place much tighter limits on local governments' ability to build a budget as they see fit. These are restraints that the state itself would never dream of operating under.

Apparently this Legislature, which very nearly shut down the state last summer, and is stuck in another overtime budget struggle this year, feels it can authoritatively lecture local governments on fiscal prudence. Note to legislators: Every city and county in Iowa is done crafting its budget for 2013. And yet, one government just can't seem to get it together.

And that's the big one beneath the gilded dome, with more revenue streams to tap than you can shake a stick at. The one with off-budget pools, fees to infinity and record reserves in the bank.

For local governments, the story is a whole lot different. The Legislature has been largely unwilling to entertain the notion of handing some of its revenue-raising power to its local cousins. It won't even seriously consider giving local voters the power to pick from a larger array of tax options that could reduce property tax dependency. The same voters who wisely send lawmakers to the Statehouse apparently can't be trusted to make the right decisions on local taxation.

Legislators, for instance, cap local hotel-motel taxes at 7 percent. Why? Nobody really knows. It just feels right in Des Moines. And allowing us to vote on a higher rate might make lawmakers look bad. So forget it. The state knows better.

Lawmakers could have used this grand bargain as an opportunity to address this nagging problem. That would have been a big deal.