A one-size-fits all property tax plan won’t work in Iowa

Every January brings the start of a new session in the Iowa Legislature and a “hot topic” of the season. This year it is property taxes.

I want to make it clear — Taxing unrealized gain on homes and businesses was one of my issues before I ran for office. Retaining local control is essential for our small towns and rural areas.

As a representative of House District 83 in rural Linn County, I heard more about property taxes than anything else. When the assessments came out last year, I heard from hundreds of my constituents. Some assessments had unrealistic increases of 50-100%. The system of determining your tax bill relies on convoluted formulas of equalizing valuations and a rollback determined by a statewide equation. The rollback determines your tax liability. If your house is assessed at $200,000, with a rollback of 50%, you will be taxed on $100,000 of value. When assessments are mailed out, property owners have no idea how much they will owe because the rollback won’t be determined until months later.

Iowa’s tax system has been tweaked and poked for the last five decades as elected officials appeased one group or another, shifting tax burdens from this group to that and then back again. It is a total mess!

To understand the complexity of the problem, I met with every city council and most school districts in rural Linn County. They shared the challenges they have preparing budgets and planning when the state doesn’t figure the rollback number until October. We have explored several ideas that would save money and give more reliability to taxpayers and those entities relying on tax dollars.

My proposal has been to limit assessment increases to only include property improvements. When a property is sold, the sale price would be the new assessed value. Removing the elusive “rollback” would give local city councils and school boards better budgeting tools. As it is today, when the city, school, or county says, “we didn’t raise your taxes” they are correct. The state-mandated increased assessment caused your tax bill to go up.

We have seen the headlines that “something will be done this year,” and that promise has brought every agency and organization that relies on your tax dollars to the Capitol to lobby for protection of their piece of the pie.

Three proposals have been presented: the governor’s, the Iowa Senate Republicans’, and the Iowa House Republicans’. The Democrats have loosely described what they might do, waiting instead to criticize anything the Republicans present.

Concepts from all four groups cap the dollars collected, removing local control. Each one pokes around the edges of a convoluted system and gives special consideration to different groups of taxpayers, transferring the burden to other taxpayers.

We need a serious discussion about property taxes, but it must include the problem of taxing unrealized gain on property and retaining local control. A tax system that works for Cedar Rapids and other larger cities will penalize the smaller ones such as Prairieburg or Mount Vernon. One size fits all ends up fitting no one.

Republican state Rep. Cindy Golding represents District 83 in rural Linn County.