Bettendorf aldermen have passed a resolution opposing a property tax cap that’s being championed by Republicans in the Iowa Legislature, contending the legislation would eventually force them to increase tax rates and reduce city services.
Ahead of the vote, Alderman Scott Naumann, 2nd Ward, said that even the advocates for the legislation are aware “that a one-size-fits all for every city in the state would be almost impossible.” He pointed to the condition of the city streets, the plowed snow each year and the Family Museum as examples of some of the services that could be put under strain if the legislation passes.
“I don’t know what it is that each person in Bettendorf loves about their city, but I would say today: It’s all essentially under assault by the state and the threat to our bottom line,” said Naumann, who is also the executive board president of the Iowa League of Cities, which lobbies the state on issues concerning local government control.
Described as a “soft cap” on property taxes by its proponents, the bill in question would allow Iowa voters to overturn property tax increases that exceed 2 percent from one year to the next by calling for a referendum. The bill cleared the House Ways and Means Committee last week and will likely be debated before lawmakers are expected to adjourn May 4.
Bettendorf’s resolution passed unanimously on Tuesday after only a few minutes of discussion. But on Monday night during a presentation led by city administrators, city aldermen spent roughly an hour voicing concerns, including the potential effects on tax incentive programs, the budgeting process and local government control.
Bettendorf Finance Director Jason Schadt used the word “nightmare” twice to describe some scenarios that could unfold if the bill becomes law. He pointed specifically to employee health insurance as a problem, saying the allowable growth rate under the state’s proposal wouldn’t come close to keeping pace with the rising costs of health care.
Rough projections made by Schadt found that the city could begin to feel the effects of the pending legislation within the next 10 years. Schadt added that an expected amendment “makes the bill a bit more palatable” but does not alleviate the city’s concerns.
Alderman Scott Webster, 5th Ward, said the bill appears to be harmful to communities that are already fiscally conservative, saying Bettendorf’s practice of keeping its rate under the state’s existing property tax cap puts the city at “a disadvantage.”
“It just doesn’t make a lot of sense,” Webster said.
Alderman Greg Adamson, 4th Ward, compared the proposed property tax cap to earlier state mandates that changed the way cities pay into the pension system.
"Here we go again," Adamson said, adding:"They're throwing the baby out with the bath water."
Meanwhile, proponents of the cap say the legislation aims to address complaints from Iowans frustrated by rising tax bills even when local levies remain constant or decline. That situation is possible if a city council keeps its tax rate steady but the property’s assessed value increases.
Iowa Rep. Lee Hein, R-Monticello, helped shepherd the legislation through the House Ways and Means Committee that he chairs last week. He’s described the bill as a truth-in-taxation measure for the process municipal governments use to collect and spend tax dollars.
“I don’t believe your local governments are being very honest with you when they tell you, ‘We are not raising your property tax levy,’ but they’re not lowering it, either, and then they’re gaining the windfall,” Hein said Monday.
So far, the bill has only cleared an Iowa House committee, meaning it would still need to pass both chambers and get inked by Republican Gov. Kim Reynolds before becoming law. But with GOP majorities the House and Senate, local elected officials are worried the legislation could be muscled through within the next few weeks unless they make their opposition clear.
City Administrator Decker Ploehn also lamented earlier property tax reforms made by the state, saying many – including changes to commercial and apartment property tax collection – were done without input from local government officials. He advised aldermen to make haste with putting their position on the record.
During Tuesday’s city council meeting, Bettendorf Mayor Bob Gallagher commended city staff for quickly drawing up the resolution “in short order.”
“I feel comfortable with it. I think that I can stand next to the governor and read it to her,” Gallagher said.
Bettendorf isn’t the only city that’s sounding the alarm about the state’s proposed changes.
City aldermen in Sioux City unanimously passed a similar resolution Monday, citing similar concerns. Sioux City Manger Bob Padmore said the legislation, which has been "vigorously opposed" by Iowa cities and counties, could trigger an election every single budget year.
Cedar Rapids Gazette reporter James Lynch and Sioux City Journal reporter Dolly Butz contributed reporting for this story.