Iowa QC legislators discuss the legislative session at a Quad Cities Chamber breakfast. From left are: Rhonda Ludwig, director of government affairs for the chamber; Rep. Monica Kurth, D-Davenport; Rep. Gary Mohr, R-Bettendorf; and Rep. Ken Croken, D-Davenport. CREDIT QUAD CITIES CHAMBER
The engines are revving on potential changes to Iowa’s property tax code at this year’s legislative session in Des Moines. Meanwhile local government leaders are pushing lawmakers to downshift as they worry the revisions could dramatically reduce their revenues. Since the start of the session, Republican legislative leaders have made it clear they want to […]
Already a subscriber? Log in
Want to Read More?
Get immediate, unlimited access to all subscriber content and much more. Learn more in our subscriber FAQ.
The engines are revving on potential changes to Iowa’s property tax code at this year’s legislative session in Des Moines. Meanwhile local government leaders are pushing lawmakers to downshift as they worry the revisions could dramatically reduce their revenues.Since the start of the session, Republican legislative leaders have made it clear they want to cut property taxes. And on Wednesday, March 8, the Senate Ways and Means Committee advanced one of two major property tax proposals in the chamber. The other proposal already cleared the committee last month.There are a lot of moving parts to the discussions over property taxes and other local government revenues this session – and the possible changes are significant. They include taking various local option sales taxes and repurposing them into a statewide tax that would divert some money into a natural resources trust created by voters in 2010 but never funded. Others are changes to various property tax credits, including the homestead credit; a reduction in the amount of commercial and industrial property value subject to tax; and establishing a link between property values and levy rates so rates would go down if values grow over a certain amount.With so much up in the air, local government officials in the Quad Cities say they are urging lawmakers to put off action until they can meet, perhaps over the summer, and consider what the different changes might mean.“Our whole point is ‘please slow down,’” Davenport Mayor Mike Matson said at a Friday, March 10, Quad Cities Chamber of Commerce breakfast.It’s not clear whether Republicans who control state government are willing to delay action this session, however.Before the session, Senate Majority Leader Jack Whitver, R-Grimes, called property tax cuts a top priority.Meanwhile, Senate Ways and Means Committee Chairman Dan Dawson, R-Council Bluffs, said at the March 8 meeting there is room for negotiation, but that groups must decide for themselves whether to engage if they want a seat at the table. “We are trying to deliver property tax relief here for Iowans and reform our system. There’s a lot of good ideas out there, but drawing lines in the sand does nothing to further this product,” he said.Which of the potential changes might move forward is a bit of a mystery at the moment. At the chamber breakfast, Rep. Gary Mohr, R-Bettendorf, said his impression is the Senate proposals are “more punitive” toward cities and counties than what is being discussed in the House. However, he said there still is interest in the House in making changes.Mr. Mohr said he has not been privy to discussions between members of the Ways and Means committees in both of the chambers. “What I don’t know is if there’s consensus on what the end goal is for property taxes,” he said.Potentially, one of the most far-reaching proposals is the bill that would tie levy rates to growth in property valuations. That proposal “scares the crap out of us,” Bettendorf City Administrator Decker Ploehn said.Rhonda Ludwig, the director of government affairs for the Quad-Cities Chamber, said the chamber opposes reducing funding for municipalities, noting property taxes help pay for local economic development and riverfront improvement initiatives.The chamber also wants to see the legislature take the go-slower approach local government officials are advocating, she said.Supporters of tax cuts, however, say action is needed. Republican lawmakers, in particular, say that they hear complaints frequently from constituents about rising real estate taxes, and they note that when the funding of mental health services was moved off property tax rolls and into the state’s general fund, many local governments didn’t reduce taxes.That’s contributed to some of the impetus at the state level for lawmakers to take action. And proponents say they’re looking for ways to diversify local government revenues.For their part, local government officials say it costs money to provide services, especially public safety services, which account for the bulk of their general fund costs. They also complain that the state legislature has broken previous promises to reimburse local governments for revenues they’ve lost because of past property tax breaks approved in Des Moines, including a 2013 law that reduced taxes on commercial and industrial properties.Just lowering the amount of commercial and property tax value from 90% to 80% would cost the City of Bettendorf about $1 million, Mr. Ploehn said.Already, local governments and legislators have had differences on an unexpected property tax issue. Lawmakers approved, and Gov. Kim Reynolds signed into law, a measure to stop a $130 million increase in property taxes, the result of an apparent mistake stemming from previous legislation that unintentionally treated residential properties the same as multi-residential.Had lawmakers not moved to make changes, property owners would have faced additional taxes. In stopping the increase, legislators caused local governments to scramble to make up for lost revenue just as they were in the late stages of finishing their budgets.Some local governments had unsuccessfully asked that lawmakers delay the fix or make up for the lost revenues with state funds.
