State government is in a bind. Revenues haven’t matched expenses, and officials are looking for ways to balance the books. It’s one big problem that can’t be solved by creating 99 smaller ones.
When massive commercial and multifamily residential property tax cuts were passed in 2013, backers of the plan said the new laws would boost Iowa’s economy through business expansion and job creation.
“This tax relief bill will put more money in the pockets of Iowa families and make it easier for Iowa businesses to invest and grow in our state,” then-Gov. Terry Branstad said while signing the bill in Hiawatha.
Because positive impacts weren’t expected to be immediate and property taxes are the lifeblood of local government, these reforms were passed alongside a $152.1 million promise to partially backfill local coffers. Before Branstad was tapped for an ambassadorship to China, he pledged to this board that he’d make good on the backfill promise, “so long as I am governor.”
Gov. Kim Reynolds, who served as Branstad’s lieutenant, feels differently. “We can’t be afraid of putting everything on the table,” she said this week.
Gazette research shows a majority of Iowa counties and cities would have no recourse if the state reneges on its promise.
Linn, Johnson and 92 other counties are already charging the maximum general service levy allowed by the state. And, of the state’s 943 cities, 808 have reached their maximum general fund levy rate — more than 350 of those have received emergency waivers to go above the maximum.
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Not only could local governments lose the promise of backfilled revenue for critical services, they’ve yet to realize the promised economic boon from property tax reform.
State officials need to take a long look at the budget. Billions in special interest tax exemptions and waivers have piled up without significant review. Policy shifts made alongside promises of taxpayer savings or increased revenue activity have not been studied or measured.
Before Gov. Reynolds and state lawmakers shift the consequences of long-ignored state problems and mismanagement onto the shoulders of local governments — leaving everyday Iowans to absorb the effects — they need to think about the promises they’ve made.
The state needs to clean its own house, first.
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