Throughout this session, I’ve been trying to keep you all updated on progress related to one of the top issues I hear about – property tax reform. This week was a productive week on this front in the Iowa House.
We began the week with a subcommittee and public hearing on the Senate’s proposal for property tax reform. This was a chance for the public to weigh in on the proposal and let us know what parts of the bill they liked and disliked.
On Wednesday, we amended the Senate File to include our latest compromise proposal. By integrating key elements from both chambers and the Governor’s original plan, we are demonstrating our commitment to property tax reform and our resolve to deliver meaningful relief this session.
Our Proposal
From the beginning of this process I have been consistent about what I want to see in any property tax proposal. I want to deliver certainty for the taxpayers, and I want to deliver meaningful relief. I believe this compromise proposal accomplishes those two goals.
Here are the main provisions of our amendment:
- Cap revenue growth at 2%, slowing the growth of government spending. This 2% cap excludes new construction, ensuring that cities and counties are still incentivized to grow, and includes exceptions for schools and the debt levy.
- Convert the homestead credit to an exemption and triple the exemption to $15,000. Funds from the previous homestead credit would be used to buy down the $5.40 levy, providing relief for taxpayers.
- Eliminate the backfill of the business property tax exemption and transfer the roughly $125 million to the Taxpayer Relief Fund to deliver additional tax relief.
- Gradually increase the share of SAVE money collected from the sales tax devoted to property tax relief from the current 7% to 25% by 2031.
- Introduce some common-sense fiscal responsibility practices in local government, like restricting the use of debt service funds for operating expenses and limiting reserve accounts to 35 percent to ensure tax dollars aren’t sitting in stagnant accounts while residents struggle to pay their tax bills.
- Allows for the creation of a new account that local governments can devote funds of over the 35% to save for big infrastructure projects or big equipment expenses, like, for example, a fire truck.
- Shift the burden of proof on the assessor when valuation increases by 10 percent or more, so that the government must justify why your bill is going up.
- Revamp the informational mailer sent to every property taxpayer to increase transparency and give taxpayers a better idea of where their money is going and how it’s being spent.
- Limit TIF districts to 20 years, ensuring this economic tool is used for its intended purpose—temporary development—rather than becoming permanent drains on the tax base.
- Create a FirstHome Iowa program modeled after Iowa’s 529 accounts, helping Iowans save for their first home.
The certainty for the taxpayer comes from that 2% cap on local government spending. We hear a lot about assessments being a problem. Under our proposal, it won’t matter how much your assessment rises; the government’s budget is capped so that means your bill is too.
The real, tangible relief for the taxpayer comes from the $5.40 buy down and the increase in SAVE money being devoted to property tax relief. This bill would provide $435 million dollars in savings just next year and $4 billion in relief over the next six years.
As the bill manager, Carter Nordman said in his closing comments on the House floor, “This plan isn’t about maintaining the status quo for taxing entities—and we recognize that change can be uncomfortable. However, for too long, the current system has been causing pain for the people we represent. And it’s their discomfort we are addressing in this proposal.”
Another Win This Week – Pediatric Cancer Research Funding
This is a topic that came up many times at my legislative forums this year and I’m proud to report that this week, we passed House File 2758 to fund $3 million for the Pediatric Cancer Research Program at the University of Iowa.
Rather than being forced to use adult cancer treatments on children, HF 2758 funds research into treatments built specifically for children. Unlike one-time grants, this is a “standing appropriation,” meaning the funding is built into the state’s budget every year. This allows researchers to plan multi-year clinical trials. Also, the bill strictly prohibits these funds from being used for administrative overhead or unrelated costs. Every dollar must go toward laboratory research and clinical trials.
