Iowa Senate Republicans began the 2019 Legislative Session focused on challenging the status quo and enacting meaningful reforms to state government. Throughout the session, we have passed numerous reforms to strengthen and grow our economy while allowing Iowans to keep more of their hard-earned money. Another critical element in our reform package passed this week in the Iowa Senate – property tax reform.
Runaway property taxes are a popular topic of discussion among my constituents and fellow Iowans. I will never forget the constituent I met while door knocking before the last election. She has lived in Ankeny for decades and owns her home outright. Yet, her property taxes are pushing her to a point where she is contemplating selling her home because property tax increases are far outpacing her fixed income.
Property tax collections have more than doubled in the last 18 years. These increases exceeded $3 billion across Iowa. Meanwhile, during that same time frame, Iowans incomes have risen only 43 percent.
Iowa homes are assessed every other year. And, when Iowans open their assessments, the majority of them find significant increases. It is nice when the value of your home increases, but the ensuing property tax is not as enjoyable. Many Iowans have seen their city or county put property taxes on autopilot; essentially capturing all of the increased assessment without adjusting the tax rate. Because of this, many Iowa homeowners have seen their property taxes skyrocket and are forced to make difficult financial decisions. People should not be forced out of a home they own simply because the increasing tax burden increases astronomically year over year.
Senate Republicans made this policy one of our key priorities going into the 2019 Legislative Session. Our plan is to improve transparency, provide accountability and control the growth of property tax increases. Truth in taxation is something Iowans not only expect, but deserve.
This bill curbs the growth of local governments by implementing permanent property tax reform to help Iowans. When property valuations rise, the levy rate for cities and counties could stay the same and property taxes could increase. Local governments may increase revenues up to 2 percent from the previous year. If the increase is higher than 2 percent, the local government would be required to approve this increase by a two-thirds majority at the public hearing on the budget. This legislation provides for more transparency by adding a new public hearing on property taxes and making sure taxpayers are informed of the public hearing. By encouraging more transparency, this helps the taxpayer participate in setting local budgets and property tax rates. This legislation will stop the automatic, large-scale property taxes Iowans have seen due to increased assessments.
When it comes to property taxes, it is the Legislature’s role to determine the state law and the policy followed by local governments. As Senate Republicans worked on crafting this legislation, we were mindful to ensure local governments will be able to meet their financial obligations regarding services, debt service and pension payments. And, just as important, we worked to ensure Iowa property owners will not be forced to sell their homes, businesses, and farms because they cannot meet their property tax obligations.
Similar reforms have succeeded in controlling the growth of property taxes in other states around the country. I am confident this reform will do the same in Iowa. The bill provides taxpayers with information necessary to ask their local elected officials the tough questions to understand the reasons for their tax increase.