Iowa property tax reform leaders remain optimistic of progress

DES MOINES - It's getting harder, but leaders of the Iowa Legislature's commercial property tax reform efforts are sure they can make progress in the final two weeks of the session.

“People still remain optimistic,” House Ways and Means Committee Chairman Tom Sands, R-Wapello, said Monday. “However, as the end of the session draws near, it's getting harder and harder to be optimistic.”

His counterpart in the Senate, Ways and Means Chairman Joe Bolkcom, D-Iowa City, agrees that “there's still an opportunity here.”

“We all agree it's a problem. We have two different proposals. I think there is some room for middle ground,” Bolkcom said on Iowa Public Radio's news affairs program “River to River” on Monday. “It is going to require both sides to come to the center here.”

That optimism isn't shared by Ken Anderson of Marshalltown, chairman of the Iowa Chamber Alliance. The group represents chambers and economic development groups in Iowa's 16 largest communities.

“I guess I get a little bit jaded because I hear it year in and year out,” he said. “Nobody seems to have the political will to grapple with it.”

That costs Iowa investment in industry as well as jobs, said Larry Countryman of Wilson Trailer in Sioux City. His firm has expanded in South Dakota and Missouri, adding 500 jobs in those locations. The decision to grow outside of Iowa was due in part to high property taxes, he said.

“There's a lot of issues why companies determine where they are going to expand,” he said. “We compare all costs to other locations. Certainly our property taxes here are higher, so it has a significant impact. It's not the only impact, but it's certainly a major factor.”

House Republicans have proposed reducing commercial property taxes by 40 percent over a period of years, limiting growth in local government budgets and tax rates, Sands said. In return, the state would backfill local government budgets with $800 million over time.

The Senate Democratic plan would create a $250 million business tax credit that, when fully phased in, would provide a 40 percent tax cut for 80 percent of Iowa businesses. The focus would be on “Main Street' businesses rather than out-of-state companies such as Walmart and Menard's, Bolkcom said. The credit would be applied to the first $390,000 of assessed valuation and cap out at $7,200 in benefits.

Countryman said he understood that Democrats want to help Iowa-based companies, but doubted he would get much benefit from their plan.

“A plant like ours costs about $12 million,” he said. “My guess is it would give us very little relief. I know there is a big hang-up about businesses that are owned outside the state, but those businesses are still providing jobs within the state.”

The Senate plan doesn't address the impact of rising residential property taxes, added Sands.

Bolkcom defended the Senate plan as a “good responsible start” that won't shift taxes.

“I think there's still a great chance in getting something very meaningful passed,” he said.

Lawmakers are scheduled to adjourn April 17.