Property-tax debate must include honest talk about trade-offs

The honesty is admirable, if a half-dozen years too late.

"If you want everything to stay the same, then it's probably going to be very hard to reduce your property tax burden," Gov. Kim Reynolds told The Gazette in November. Perhaps not every town needs a fire station, she went on to say.

That kind of honesty — that tax cuts require trade-offs — should absolutely shape coming property tax-cut debates.

We would have welcomed that kind of honesty during the income tax cut blitz of the last few years, in which state leadership slashed corporate taxes, eliminated the inheritance tax, and implemented a 3.8% flat rate personal income tax. Those cuts, propped up by a Covid-era economic bubble and underinvestment in Iowans’ health and education, were accompanied by virtually no talk of trade-offs, just claims of “overtaxing” and implications that we could cut, cut, cut, and never feel the pain.

But the good times could not last. The biggest cuts took effect just as the revenue bubble receded. State revenue has dropped by $1.6 billion just since 2024. At historic rates of spending, we will eat up all our surpluses in just a few years.

So when those same tax-cutters — now hemmed in by ugly revenue projections at the state level — turn their attention to local property taxes, we must hope their newfound honesty holds.

It’s not too late to learn the lessons of the state tax cut experiment.

We now have property-tax plans from the Gov., Senate and House. Details vary, but all would constrain local governments’ ability to keep up with rising costs by capping revenue growth. All would introduce substantial tax exemptions. The Senate and Governor are proposing targeted cuts or freezes to older Iowans, and the Senate’s proposal would raise local-option sales tax, gas tax and vehicle registration fees to help offset revenue losses.

Our state’s current property tax structure is more than 50 years old. Finding smart ways to modernize the system makes sense. No one wants to see a senior forced to move from their home because they can’t pay the tax bill. Everyone wants to see services provided efficiently.

But reforms should be sustainable and targeted to people struggling most with housing costs, and our expectations for efficiencies should be grounded in reality.

The biggest chunk of local city and county budgets is for police, fire and emergency services. In much of rural Iowa, these services are already being delivered by volunteers, with response times often reaching 30 minutes. More school districts are cutting programs or moving to four-day weeks, and more county hospitals are reducing services or closing their doors entirely. There’s not much fat to cut.

The rhetoric from tax-cut proponents has focused on “providing certainty for the taxpayer, not government units.” But this “us vs. them” framing belies the reality that there’s no bright line separating citizens from systems.

Taxpayers — you and I, our friends and neighbors — want to drive on well-maintained streets and walk on safe sidewalks. We want to know our 911 calls will receive a prompt response. We love our neighborhood parks, libraries, schools and senior centers. And we recognize our role in keeping our community a great place to live, work and learn.

You could certainly pay less. But you should expect to get less.

Kylie Spies is a senior policy advocate at Common Good Iowa, a nonpartisan organization that leverages data, analysis and relationships to craft people-centered policy solutions for our state’s most pressing issues.