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Iowa governor signs property tax constraints into law
Republicans say measure is just the first step in addressing property taxes
May. 4, 2023 5:54 pm, Updated: May. 5, 2023 2:32 pm
DES MOINES — A measure aimed at reducing Iowans’ future property tax bills was signed into law Thursday by Iowa Gov. Kim Reynolds.
Reynolds signed the bill during a ceremony in the Iowa Capitol rotunda shortly after state lawmakers concluded their 2023 session.
Reynolds called it the most significant property tax reform in state history.
“But even more important than what it accomplishes today, is what it lays the groundwork for tomorrow,” Reynolds said, noting recent Republican-led reductions to Iowa’s state income tax.
“I’ll say the same thing today as I said after signing each one of those tax bills: We are not done. This is just the beginning of our promise to deliver the property tax relief for hardworking Iowans that they need and deserve.”
What the law does
The new law — House File 718 — seeks to achieve a reduction in future property tax growth primarily by merging most local government and school property taxes into one general levy, then installing mechanisms that reduce that levy if taxable valuation grows beyond a certain level.
Under the new law, when property assessments increase between 3 percent and 6 percent, the tax levy growth is limited to 2 percent. When assessments increase 6 percent or more, the levy growth is limited to 3 percent.
Those provisions will be in effect for four years, after which state lawmakers will need to determine whether to continue with the structure or change it.
Republican legislators have estimated the new law will reduce future property taxes by at least $100 million.
“I can’t think of a better way to end a legislative session than adjourning just a few minutes ago and now coming down for a bill signing of the most significant property tax cut that we have ever had in our state’s history,” said Sen. Jack Whitver, from Grimes, the leader of majority Senate Republicans.
The proposal earned strong bipartisan support among state lawmakers, passing in the Iowa House, 93-1, and the Iowa Senate, 49-0.
“Democrats supported the legislation that was signed. We know that middle-class families deserve relief,” said Sen. Zach Wahls, from Coralville, the leader of the minority-party Senate Democrats.
“I think that we’re going to continue to see how property tax rates actually are affected by the legislation that was passed and to listen to folks on the ground about how this is going to affect the abilities of local governments to provide for the basic services of their residents.”
Other provisions
The new law includes myriad other provisions regarding property taxes:
- In an effort to bolster transparency in the state’s property tax system, it requires publication of explanations of a property owner’s property tax bill, including information about rates and the amount of property taxes to be certified.
- The bill requires that any time a city, county or school district requests a public vote on a bond for financing, a notification containing information about the request must be mailed to every voter in the applicable district.
- The bill requires that a public vote on a school or government bond proposal must be held the same day as general elections — the first Tuesday after the first Monday in November. A bonding referendum can be put on the ballot in both even- and odd-numbered years.
- Local governments will be able to increase some fees in order to offset any future revenue restrictions.
- The bill creates a new property tax exemption for homeowners 65 years and older and increases the exemption and credit for property owners who are veterans.
- The bill prohibits the future creation of the Public Education and Recreation Levy, known as PERL or the Playground Levy, used by some school districts. Current PERL levies are allowed to remain.
Comments: (515) 355-1300, erin.murphy@thegazette.com
