The Iowa Senate’s property tax reform bill advanced through subcommittee on Wednesday. The bill would put a two-percent cap on growth for each year with an extra one-percent for emergency. That extra percent must be approved by public hearing and a two-thirds vote of the board or council.
Opponents and supporters filled the subcommittee room for conversation.
Senator Randy Feenstra (R-Hull) said the goal of the legislation is to slow down the growth of property taxes. He called the bill a “working draft.”
Feenstra said the bill is somewhat similar to the House version. The Senate’s bill, though, does not put a cap on any reserve funds. It also helps the elderly.
The bill also addresses a problem . An Iowa bill in the past was approved that required assessors to follow the assessment manual. But what isn’t in the bill is which manual they are supposed to follow.
Cities or counties will start each year with their current maximum property tax dollars certified for the current fiscal year. Debt service, mental health, capital projects and pension and retirement benefits will not be included within the maximum property tax dollar cap.
Brian Johnson, who represents Polk County, said a better approach would be to form a study committee.
“Polk County happens to be very lucky in having a growing population, a dynamic community here in Des Moines and the suburbs — we think this kind of approach not only restricts us but may take us back in serving those needs,” Johnson said.
Matt Everson of National Federation of Independent Business spoke in support of the bill. He said both the House and Senate bills have great elements.
“Taxes have just increased dramatically for our business owners the last 17-18 years,” he said.
Dane Schumann with Iowa Emergency Management Association said that group opposes the bill as well because of concerns with being able to have a special levy for local emergency management services.
Jennifer Kingland of the Iowa Taxpayers Association spoke in support of the bill. She said she’d like someone associated with commercial property interests to be included on the property tax advisory group the bill would create.
Nicole Crain with the Iowa Association of Business and Industry spoke in support of the legislation as well.
“Putting a cap on local government is a way to help control some of those increases that we’ve seen,” she said.
John Stineman of the Iowa Chamber Alliance pointed out businesses pay 28 percent of all property taxes in Iowa. Stineman said he appreciated the requirement of a two-thirds majority vote of a board to approve growth that exceeds the two percent cap. The board can approve up to one additional percentage point for the annual growth percentage.
Matthew Steinfeldt of the Iowa Farm Bureau Federation spoke in support of the legislation. He said the state will collect more than $5.75 billion in property taxes this year.
“The growth of property taxes is outpacing the economy and outpacing Iowans’ ability to pay,” he said.
Drew Klein of Americans For Prosperity and Chris Ingstad of Iowans for Tax Relief also spoke in support of the bill.
A number of people representing cities and counties spoke against the bill. Some of their arguments included a desire to maintain local control, hope for a study committee rather than a bill that acts without knowing all the potential ramifications and concern with a city or county’s ability to provide services if growth is capped. Other concerns included a city or county’s ability to hire the best possible employees for competitive positions.
Scott Sanders, the city manager of Des Moines, said without a relief valve beyond three percent, it becomes a service-level issue for Des Moines.
“We want to make sure that everyone understands restricting revenues restricts the service levels as well,” he said. “We want that decision to be made locally.”
Mayors from Ames, Urbandale, Pleasant Hill, Nevada and Johnston spoke against the legislation. The city manager of West Des Moines also spoke against the bill.
Senator Pam Jochum (D-Dubuque) said she had to wrap her mind around what falls under the cap and what is outside of it. Ultimately she said she believed the better cities do, the better the state does.
“The same people that are electing our city council, our mayors and our supervisors are the same people that elect all of us in that room,” Jochum said. “I truly have always believed that the prosperity of any state bubbles from the local government.”
She declined to sign in support.
“I believe that this bill puts a straight jacket on local governments,” she said. “I’m trying to figure out why we think we can budget for local governments better than they can do for themselves. If the federal government did that to state government, we’d be in a riot down here.”
Senator Dan Dawson (R-Council Bluffs) said he knows there’s still work to be done on the bill, but supports continuing the conversation.
“Just because assessments go up $30,000 doesn’t mean the taxpayer has the ability to pay for that,” he said.
Feenstra signed off on the legislation as well. He said caps that were put in place years ago have been circumvented and are now absolutely irrelevant. For Feenstra, he wants taxpayers to have a clearer picture of local taxation.
“To me that’s important,” he said. “That shows legitimacy and transparency to taxpayers who, right now, (are) in the fog. They have no idea, they just know they’re angry, they’re upset every time they get their property tax bill. It’s an incredible increase. That’s why we’re here and what we’re trying to resolve.”
