DES MOINES — Burger King franchisee Randy Bradley has to sell more burgers and fries in Ottumwa than at his Missouri restaurant to satisfy the property tax appetite of local government.
Although the two Burger King buildings and lots are the same size, Bradley told a House Ways and Means subcommittee March 4 it takes $130,000 more in sales in Ottumwa than Kirksville to cover property taxes. His bill was about $11,500 in Kirksville but more than $37,000 in Ottumwa.
“If I can’t do $130,000 more in sales, I need to be in Missouri,” Bradley said.
Gov. Terry Branstad’s proposal to reform Iowa’s property tax system, House Study Bill 150, would reduce commercial and industrial property tax values by 20 percent over a four-year period, fully fund local property tax credits and cut by half the current 4 percent cap on property tax growth for residential and agricultural classes.
That would offer businesses more predictability than Senate Democrats’ proposal to provide $250 million in relief targeted to smaller, Iowa-owned businesses, according to Barb Kniff of Pella, whose family owns KLK Construction.
Earlier Monday, Branstad called Democrats’ approach “absolutely wrong” and unfair to homeowners because it does nothing to lower their property tax burden.
Democrats’ plan, like federal deductibility, would be “an asterisk on the tax table,” added Craig Patterson of Professional Developers of Iowa, which represent 300 private- and public-sector economic development officials. It would be a benefit not apparent to businesses looking for a place to locate a new business, he said.
Iowa property tax reform has global implications, according to Greg Couves, plant manager for a Knoxville 3M facility with 600 employees. 3M, which does business in about 200 companies, has an overall payroll in Knoxville, Ames and Forest City of $63 million annually, he said.
In a recent in-house competition to take on a new product line, the Knoxville plant topped other 3M facilities in productivity, efficiency and other factors but couldn’t match a Polish plant because of taxes.
Ways and Means Committee Chairman Tom Sands, R-Wapello, plans to take both HSB 150 and House File 2, which would reduce property taxes across all classes by shifting K-12 education funding to the state, to the full committee.