Next up for Iowa lawmakers: Property taxes

DES MOINES — Iowa Republican lawmakers are turning their focus to property tax reductions in the coming weeks, which leaders listed as a top priority when the legislative session began.

Competing legislation is floating between the Senate and the House intended to cut property taxes for Iowans, and lawmakers will need to come up with a unified proposal to pass in both chambers before sending it to Republican Gov. Kim Reynolds' desk for a signature.

That work is in its early stages, according to Republican Rep. Bobby Kaufmann of Wilton, chairman of the House tax policy committee.

Kaufmann said he is meeting with Senate leaders to put together a bill combining the two chambers’ proposals while incorporating input from local leaders, who depend on property taxes to fund governmental and school operations.

“We’re in the process,” he said. “And it will probably take a couple weeks to merge the two of them, and then we’ll have something to present to people for consideration as sort of a grand compromise.”

The proposals

The House bill, House File 1, has three main divisions: It would lower the property tax levy for state school funding; limit annual property assessment increases to 3 percent; and require school districts to put down 10 percent of a project’s cost and notify property taxpayers before holding an election to borrow money for a building project.

Sen. Dan Dawson, a Republican from Council Bluffs who chairs the Senate tax policy committee, has proposed two bills targeting property taxes.

Under Senate File 356, property assessments would be capped in cities and counties, and if total taxable value increases over a set percentage, local governments’ levy rates would be decreased. It also would combine several revenue streams into a general levy for both cities and counties.

Democrats voted against that bill in committee, arguing it would cut local governments' revenue and the services they can offer.

Senate File 550, another bill from Dawson, would expand a number of property tax credits like the homestead, elderly and military service credits and limit assessment values for some commercial properties.

The bill also would overhaul the state’s sales tax, bumping it up from 6 percent to 7 percent statewide, while eliminating the local-option, 1 percent sales tax that most local governments have in place.

Goal: lower tax bills

Dawson said the end goal of lowering tax bills for Iowa property owners is more important than the specific mechanisms to make that happen.

"When we walk out of session, we have to make sure that we have mechanisms built into code to protect the taxpayer from these incessant spikes," he said. "That just has to happen."

House Speaker Pat Grassley of New Hartford said on Thursday the House property tax bill was one of the remaining priorities House Republicans will turn their attention to in the coming weeks.

“You’re going to see more efforts put into that within the caucus,” Grassley said. “We feel pretty strongly, we continue to hear from Iowans that they want to see us provide a level of relief and certainty, which our bill really does both of those things.”

Kaufmann said he has been taking suggestions from counties and cities on changes to financing laws that could cut regulations around how they spend money.

He said the bill would be a “property tax/city and county financing structure bill.”

Democrat position

Democrats have said they are open to supporting legislation lowering property taxes, but they want to make sure it offers relief to middle-class taxpayers and does not result in weaker local services to Iowans.

Iowa House Democratic leader Jennifer Konfrst of Windsor Heights said on Thursday that Democrats are wary of what the final agreement will be.

“Services still need to be paid for,” she said. “So how are they being paid for? Is it through a different mechanism of taxation that’s really not a net reduction for Iowa families?”

Comments: cmccullough@qctimes.com