Senate lawmakers advance property tax reduction bill

DES MOINES — Senate lawmakers advanced a new bill aimed at limiting Iowa property taxes as part of ongoing negotiations between House and Senate Republicans on lowering tax bills.

Senate Study Bill 1218, introduced by Sen. Dan Dawson of Council Bluffs, carries over much of the same language of previous bills that have advanced in the Senate, while adding new provisions.

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It would combine a number of city levies into one general basic levy and put limits on that and counties’ main property tax levies.

If the total taxable value in a city or county rises above a certain percentage, the central property tax rate would be lowered following a set formula.

“The system is broken,” Dawson said Tuesday. “We need to get back to where it was.”

While the main property tax levies would be capped for cities and counties, there are a number of levies for specific purposes that would remain uncapped.

The bill would also expand the existing homestead tax credit for people over 65, allowing them to claim a larger credit. The bill would also expand the tax credit for veterans, allowing them to claim an exemption on $4,000 of taxable value.

The bill passed out of the Senate Ways and Means tax policy committee along party lines Tuesday, with Republicans in support and Democrats opposed.

Sen. Pam Jochum, D-Dubuque, said while she voted no, she wants “to continue working with the majority party to try and find some way that we can all reach agreement, and hopefully reach agreement with the House on something.

“Because we do know that a lot of Iowans are very concerned about their property tax bill, and they are experiencing some sticker shock with the latest assessment letters that they've gotten in the mail,” she added.

Chris Hagenow, president of Iowans for Tax Relief, said he supported the measures and said the proposals are broadly supported by Iowans.

A recent Des Moines Register/Mediacom Iowa Poll found that 58 percent of Iowans are in favor of cutting property taxes and limiting what local governments can spend on services.

“Iowans specifically support the kinds of things that you’re trying to do in this bill,” Hagenow said. “That will be very popular with people who, as others have said, are frustrated with their rising tax bill.”

House lawmakers last week advanced their preferred property tax reduction bill out of the Ways and Means Committee with support from both Democrats and Republicans. Despite the differences between the House and Senate proposals, lawmakers said they were getting closer to an agreement.

The House bill would cap the property tax bills for each individual taxpayer at no more than 3 percent higher than the previous year for residential properties and 8 percent for commercial properties. It includes exceptions for renovations and new constructions.

Increasing bond thresholds

The Senate bill also would raise the cost ceiling that would require cities and counties to put certain purchases or projects to a public vote. Under current law, local governments need to obtain voter approval in a special election if they want to borrow money over a set amount for a major purchase or new construction, depending on the size of the city or county.

Those numbers have not increased since the 1990s. The bill would increase the limits across the board by 30 percent, allowing cities and counties to undertake larger expenses without a referendum.

Lobbyists representing cities and counties at the subcommittee meeting Tuesday said they supported increasing the bond limits but expressed concerns about some of the other limitations.

The House bill would not increase those thresholds, but it would require that a vote on borrowing money be held on a general election date in an effort to increase voter participation.

School recreation levy

The bill would phase out the Public Education and Recreation Levy imposed by some Iowa school districts, a levy of up to 13.5 cents per $1,000 of taxable value for building public playgrounds.

Any schools not using the levy would not be able to enact one, and the existing levies would phase out over five years. Education advocates argued removing the provision would eliminate a tool that voters have voluntarily approved.