Don’t harm Iowa’s local governments

The chairman of the Senate Ways and Means Committee, which handles state tax policy, said last week he’s determined to reduce property taxes and find a way to fill the Natural Resources and Outdoor Recreation Trust Fund during the upcoming legislative session.

Details as to how Sen. Dan Dawson, R-Council Bluffs, plans to accomplish those goals are unknown. But they could have a big effect on local governments.

Counties, cities and school districts rely primarily on property taxes to build their budgets. So any move to cut property taxes could make it tougher for local governments to fund an array of services.

The Natural Resources and Outdoor Recreation Trust Fund has remained empty since voters added it to the state constitution in 2010. Lawmakers have failed to approve a three-eighths-cent sales tax increase to provide dollars to the fund.

Last year, Dawson floated a plan that would eliminate voter-approved local option sales taxes while raising the state sales tax. A portion of the increase would fill the fund and a portion would go to local governments to make up lost local option tax revenue.

In Cedar Rapids, that change would have a big impact on street repairs, which are funding in large part through a local option sales tax.

“That would be so wrong if they did that,” Cedar Rapids Mayor Tiffany O’Donnell told our editorial board this week, pointing to the fact local voters approved the sales tax.

“Our streets will start to deteriorate again,” said City Manager Jeff Pomeranz.

It’s easy to see why local governments would be skeptical of any legislative plan that takes revenues away with a promise to replace them with state payments. Lawmakers approved a commercial property tax cut with a promise to backfill lost local revenues. But in 2021, the Republican-controlled Legislature voted to phase out those backfill payments.

Also, one big reason property taxes are seen as a burden is because local governments have few alternative tools to raise revenue. The local option sales tax is one of those few tools. It’s allowed Cedar Rapids to shift the cost of road projects from property taxes to sales taxes.

We’ll wait to see Dawson’s detailed plans. But lawmakers funding their priorities on the backs of local government is one of the Legislature’s worst traditions. Legislators should think twice before adding yet another harmful chapter to that history.

(319) 398-8262; editorial@thegazette.com

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