(The Center Square) – Iowa’s legislative chambers on Wednesday each passed their own respective bill to cut property taxes, with bipartisan support.
The Iowa Senate’s bill, SF 569, includes an estimated $100 million in property tax relief and preserves the Taxpayer Trust Fund, according to an Iowa Senate news release. The bill eliminates two levies, providing $4.5 million in relief, and changes the veterans and seniors property tax credit to an exemption, bringing $57 million in relief. The Iowa Department of Management estimates the bill’s city and county levy reform would cut taxes by $45.4 million. Levy rates would decrease as assessment rise.
County boards would have to publish an estimate of the annual increase in property taxes that would come with the bond issuance on a residential property with an actual value of $100,000.
“In 2021, the Iowa Legislature moved the cost of mental health services from property taxes to the state general fund. Less than half the counties in Iowa passed those savings to the property taxpayer,” Sen. Majority Leader Jack Whitver, R-Ankeny, said in the release. “Unlike past efforts to provide property tax relief, SF 569 is not a tax shift. It is $100 million in relief and controls the growth of local government spending. It avoids the pitfall of pouring water into a bucket with a big hole in the bottom.”
Sen. Herman Quirmbach, D-Ames, voted against the bill.
The House of Representatives passed HF 718 in a 93-1 vote.
The bill began its journey through the chamber in January, as HF 1. It provides more than $200 million in property tax relief, according to an Iowa House Republicans news release.
With funding from the Iowa Taxpayer Relief Fund, the state would reduce the $5.40 levy per $1,000 by $1 beginning in fiscal year 2024. Annual property tax increases per parcel couldn’t exceed 3% for residential and agricultural properties or 8% for commercial and industrial properties. Tax bills would need to look like an itemized receipt and tell Iowans where their money is going. Elections for bonding would take place every November.
Most local governments would need to mail owners or taxpayers notices regarding the current and budget year property taxes and respective rates, through one single notification, provided the information’s available in a timely manner, the bill’s fiscal note said. Statewide, that mailing cost will be more than $1.9 million, with unknown programming costs for tax system software to produce the notifications.
“The current system is complicated and provides very little transparency and no certainty for taxpayers,” Floor manager Rep. Bobby Kaufmann, R-Wilton, said in the release. “I don’t think there’s a single legislator that hasn’t heard the call for property tax reforms and reductions. Iowans – we have heard you. We’ve heard that the tax you need us to address most is property taxes. We got to work and this bill delivers the relief and certainty that you need.”
While Rep. John Forbes, D-Urbandale, said on the House floor that while he wishes that local governmental bodies could have more control over the timing of bond issues and he’s concerned that the 3% cap for property tax increases could be problematic for fast-growing cities, he supports the bill.
Rep. Michael Bergan, R-Dorchester, voted against the bill.
Each bill has passed to the opposite chamber.
