By now all of western Iowa has received the new valuations on their property for property tax purposes. Everybody is probably shocked, and I have received many phone calls with questions about the process. “How can they do this?” they ask.
The short answer is Iowa law requires county assessors to match your property value to market conditions. It is one part of the formula that ends with you paying the tax. The inflation America has experienced in the last three years comes from the massive money-printing and distribution of funds through the Covid years. When you have a massive supply of money looking for goods and services, you get higher prices. This is the very definition of inflation. Much of that money went looking for real estate, and now we have high house prices, high mortgage rates, and even 40 year mortgages available.
The high sales prices are forcing currently owned homes to skyrocket in assessed value. Assessors are not at fault for your increasing property tax bill. They are just following Iowa law and providing their portion of the formula.
The rest of the process is driven by your local elected officials such as county, city, school, community college, and public hospital office holders. Using counties as an example, supervisors collect the assorted department budget proposals and put them into a total budget. They can then decide if they want to tax the amount needed to fund the budget by dividing the budget by the taxable assessed value. Here is where the confusion starts.
If the local elected board applies the same tax levy as the previous year with this year’s higher assessments, your taxes will increase. Many times, this is the case and the elected official tells constituents, “I didn’t raise taxes, the levy is the same as last year.” But that is not true. If the supervisor wants to keep the tax collection the same, they have to lower the levy in response to the higher property assessed values, which are required by law to match market conditions. They cannot blame the assessor. The taxing authority and the responsibility to do math falls squarely on the elected official.
The simplest way to look at this as property tax notices come out soon is this: if your tax notice is one penny higher, your taxes went up, and the person to answer for it is your elected official. If it is a minor increase to adjust for higher employee costs or the increased cost of diesel fuel, you may be okay with that, but whether the increase is small or large, the person you voted (or didn’t vote) for is answerable for the increase. Don’t let them tell you they taxed the same as last year, because you paid more this year than last.
As we are in the final month of the legislative session, property tax reform is one of the large issues to be considered. The Senate bill is an aggressive answer to these problems. In the most simple terms, it consolidates multiple levies into one and limits the rate of growth of public budgets of our local governments.
At a recent forum I was taken to task for supporting this bill and its limited growth approach. A supervisor asked me when I was going to back off and let the local elected officials make local decisions. My instant and honest answer is that I will quit supporting property tax limits when all the people in the room want more services and clamor for higher property taxes. We are nowhere near that point. Even in western Iowa.
I’ve been frustrated that property tax reform is controversial in a Republican trifecta with more Republican local officials than ever. When Republicans gained the Senate, House and Governor’s office in 2017, we spent the first two years DE-appropriating the previous year’s budget. The money just wasn’t there. We were correcting a split legislature’s mistake in rough economic times. We did it, and Iowa was rewarded for our new fiscal responsibility. I don’t understand why local officials are not content to budget conservatively, take the credit for lower taxes, and just blame the Legislature for not letting locals tax more than Iowans want to pay. That seems easy for the local elected officials, and I know our shoulders are broad enough to take the little bit of heat that will ensue. And the vast majority of Iowans will reward us.
Author: Jason Schultz
State Sen. Jason Schultz served three terms in the House prior to being elected to the Iowa Senate. Schultz served seven years in the National Guard and served as volunteer fire fighter for the Schleswig Volunteer FD for 13 years, two years as the department's chief.
