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Axios
31-03-2025
- Business
- Axios
Iowa's proposed property tax cap could derail DART
DART projects it will need to cut as much as 40% of its services over the next five years if either of two bills that advanced in the Iowa Legislature last week becomes law. Why it matters: Thousands of metro residents depend on DART, which provides millions of rides yearly. The legislation comes as the agency unveils concepts for redesigning its entire metro bus network following years of budget challenges. Driving the news: House Study Bill 313 and Senate Study Bill 1208 are nearly identical Republican-backed proposals for the most comprehensive Iowa property tax reboot in about 50 years. Most property tax growth would be limited to 2% annually, below the typical inflation rate. Both were approved by legislative subcommittees last week and are now eligible for full committee debate. Context: The bills would most directly affect local governments, which rely on property taxes. A dozen metro governments pay about 70% of DART's $43.4 million annual budget using a formula based on the services they receive. State of play: Local governments are also phasing in a new DART funding formula over the next five years, intended to provide more financial stability and fairly distribute costs among metro cities. DSM proposes a 50% increase — from 5% to 7.5% — in its franchise fee for gas and electricity to help cover its commitment. What they're saying: DART was already considering a budget scenario limiting property tax growth to 4%, which would still mean some service reductions because costs have risen slightly above that level recently, CEO Amanda Wanke said in remarks to lawmakers this week. Plus, the legislation could limit DART's ability to fully implement the funding agreements among metro cities, she said. The other side: Rising property taxes were a recurring top concern among voters before November's elections, prompting the bills.
Yahoo
27-03-2025
- Business
- Yahoo
Property tax bill removing rollback system passes House, Senate subcommittees
Scott Sanders, city manager of Des Moines, left, spoke to House lawmakers in a subcommittee meeting on property tax legislation March 26, 2025. (Photo by Robin Opsahl/Iowa Capital Dispatch) Promising that movement will continue to be slow, panels in both the Iowa House and Senate moved forward Wednesday with the major property tax proposal set forward by legislative Republicans. Subcommittees for House Study Bill 313 and Senate Study Bill 1208 were held Wednesday, the first public hearings for the property tax legislation that Rep. Bobby Kauffman, R-Wilton and Sen. Dan Dawson, R-Council Bluffs introduced in early March. The legislation would change Iowa's local property tax system from a 'rollback' to a 'revenue-restricted' system, according to the legislators. Currently, residential property taxes are calculated by assessing the market value of a property, a portion of which is taxable. The Iowa Department of Revenue sets the rate of how much of the property's value can be taxed each year based on the growth of statewide taxable properties — but the rollback system limits how much the aggregate value of residential property can grow each year to 3%. The new system would remove this rollback restriction, allowing taxable property value to grow by a larger margin in the state. However, there would be new limits in place that would limit property tax growth, Dawson and Kauffman said, including measures that cap the increase of most property tax levy rates to 2% each year — excluding new construction — and that limits the amount of new tax revenues that local governments can collect. The new system would be phased in over the course of five years. Several speakers at the subcommittee meetings expressed concerns about the 2% growth cap. Amy Campbell, representing Polk County, suggested that instead of a flat rate, the growth cap should be attached to the consumer price index (CPI) or the Midwest employee index 'since human resources and employee costs are a large part of the budgets and county government.' Jolly Omar with the city of Pleasant Hill said the 2% cap could have a negative impact on cities' ability to keep up with inflation as it relates to services and staffing that residents. 'The 2% hard cap is a little too restrictive when you take into account CPI, when you take into account public safety costs — again, those are expanses that for Pleasant Hill, about 50% of our property tax dollars go towards the support of public safety,' Omar said. 'So we just want to help bring some context with that.' Scott Sanders, city manager of Des Moines, expressed similar concerns, saying that public safety makes up 60% to 70% of a city's general fund spending. In Des Moines, he said, public safety costs grow 4% each year. 'The 2% will not reconcile with that,' Sanders said. 'The 2% cap, coupled with the historic 4% growth in public safety, would force Des Moines to make about $2 million of additional cuts each year continuously.' Sanders and other speakers also brought up concerns about the changes to revenues collected through tax increment financing (TIF) — a mechanism where increased property tax revenues in a designated TIF district from development in that area go toward public improvements in that district. He said he feared the change would stop cities from pursuing these projects. 'A new development within a TIF district will not generate the future additional general operating lending dollars that are needed,' Sanders said. 'Obviously, those projects are breeding additional needs for services. There is no motivation at that point for communities to incentivize the projects, because they're not getting any additional tax dollars for operations at any point.' Dawson said he did not agree with concerns brought up about TIF districts, saying that if 'TIF is your first concern on property tax reform, you're not concerned about property tax reform.' He said while these projects may be financially beneficial for developers and cities, they do not benefit most taxpayers. 'The people involved in TIF are probably going to make some money off it, and everyone else has to have a bad system and a high TIF rate to support it,' Dawson said. 'And by the way, from a state budget standpoint, we're here to make you whole at the tune of $95 million a year right now, the state of Iowa is supplementing on TIF, which we are robbing from school districts.' The bill also shifts $426 million funding for K-12 schools currently paid for using property taxes to the state. Dawson told reporters this would not result in an increased cost to the state, as these funds would be reallocated from existing tax credits that would be eliminated by the legislation. Margaret Buckton, representing the Urban Education Network and Rural School Advocates of Iowa, warned that while the state taking over the levies funding public schools under the current formula will result in a lower cost for property taxes, it could make it more difficult for schools to get needed funding from the state. 'What that does is makes it a lot harder for schools to convince you and the public that they have enough money, because you see your line item going up in investment (from the state) and don't necessarily see what the property taxpayer would have paid,' Buckton said. 'We are struggling with adequate funding, and this doesn't make it easier to do that, but understand that gives property tax relief.' Rep. Larry McBurney, D-Urbandale, said he was glad to see the process of this bill going 'a little bit slower' than previous discussions on property tax changes and that he still had issues with the legislation. However, he said the bill could be a good vehicle for needed changes to Iowa's property tax law. 'I will give credit where credit is due, and that is, this is a very bold change to our property tax code,' McBurney said. 'I think that there are a lot of things in here that are workable. There are concerns that I have, speaking with my city leaders and speaking with my school districts that I would like to see addressed. … (I'm) not ready to call it a property tax cut yet, because I don't think we've seen a true cut since we started doing this in 2013, but I am hopeful.' Kaufmann said he appreciated the feedback from local officials and advocate groups on the issue, pointing to multiple areas brought up by lobbyists that were areas 'to work on' like TIF components and education funding consistency. He said these discussions were why he 'committed to moving slowly on this.' 'That's why there was two weeks in between subcommittee and the bill being released,' Kaufmann said. 'There'll be two more weeks in between subcommittee and committee, and then after that, I'm sure we'll have a couple more weeks after that, where we will then continue to solicit feedback and hopefully put forth an amendment that most of us can agree on.' House Speaker Pat Grassley said Republicans are 'not trying to rush anything forward' and were still assessing the full impact of the proposed changes to Iowa's property tax system. 'When you're trying to tackle something of this magnitude, it isn't something you should rush forward,' Grassley told reporters earlier in March. 'But we've been having some good meetings with groups coming in … and I think we need to be very deliberate, because this is a significant change to the current system.' Though legislators said they plan to take their time with the measure, Dawson said he believed moving forward with the measure was necessary to lower costs for Iowa taxpayers. 'I've got to say that, either we do something in this (form) or we do nothing at all and stay in the current system, which isn't fair to the taxpayers,' Dawson said. 'And I'm not sure some other entities out there can survive underneath that.'
Yahoo
07-03-2025
- Business
- Yahoo
Iowa Republicans release bill that looks to overhaul property tax system
DES MOINES, Iowa — High property taxes is something that Iowans have known well for the last several years, along with city leaders trying to find ways to overcome shortfalls in budgets. Senate Study Bill 1208 and House Study Bill 313 are companion bills that look to overhaul the current property tax system in the state according to the republican bill sponsors. 'In previous years, anytime we've done property tax legislation, it's been calling around the edges, tinkering with in the current system, making incremental improvements to the current system and this bill takes a completely different approach,' said State Representative Bobby Kaufmann (R) District 82 from Wilton. The bill is estimated by the republican sponsors to provide $426 million in property tax cuts, implements a 2% revenue restriction to give relief to Iowans, $25,000 homestead tax credit and gives seniors a property tax freeze if they make less than a certain income threshold. The bill aims to lower tax levies by phasing out a rollback system that hasn't been updated since 1977. These changes would be applied over the next half decade. Snow piles up in Carroll with more snow on the way 'Iowans will get a $400 million property tax cut through basically the state assuming a greater portion of school funding,' said State Senator Dan Dawson (R) District 10, from Council Bluffs. Rep. Kaufmann and Sen. Dawson said the bill was a result of years of conversations with local and city governments. There is no expectation for the bill to move forward quickly as both want the state to see the proposal, and amendments may be added. They both expect the bill to pass this session. Democrat leadership and members of the Iowa House caucus responded to the bill dropping on Thursday afternoon. 'Iowans should be extremely skeptical about the GOP's latest property tax plan. Over the last decade, every attempt by GOP lawmakers to fix Iowa's property tax system has failed. Property taxes just keep going up every year, especially for homeowners. House Democrats believe we need to put money back in the pockets of homeowners and renters immediately.' Rep. David Jacoby (D) District 86 from Coralville Iowa News: 1 killed in Shelby County armed standoff Iowa Republicans release bill that looks to overhaul property tax system Snow piles up in Carroll with more snow on the way WHO 13 Farm Report: Thursday, March 6th Remains of Iowa WWII soldier killed on D-Day identified Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Yahoo
07-03-2025
- Business
- Yahoo
Iowa bill could overhaul property tax system
Iowa Republicans introduced a bill to overhaul the state's property tax system. The measure, House Study Bill 313 and Senate Study Bill 1208, would create a new formula to calculate property taxes. It would also change how much money goes toward education through property tax relief. The bill would increase the Iowa school-funding formula to 100% over the next five years. It's currently around 88%. Republicans say the move would cut property taxes by hundreds of millions of dollars. Democrats want to guarantee those savings before signing off on it. Local tax authorities will be given time to read the details and implications. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Yahoo
06-03-2025
- Business
- Yahoo
GOP tax committee chairs introduce property tax legislation
Sen. Dan Dawson, R-Council Bluffs and Rep. Bobby Kaufman, R-Wilton talk to reporters March 6, 2025, about their proposal to make changes to Iowa's property tax system. (Photo by Robin Opsahl/Iowa Capital Dispatch) The Republican leaders of the Iowa Legislature's tax committees released their property tax proposal Thursday. Rep. Bobby Kaufman, R-Wilton and Sen. Dan Dawson, R-Council Bluffs, chairs of the House and Senate Ways and Means committees, respectively, introduced legislation that they said in a news release would be 'the biggest property tax system overhaul since the 1970s.' The measure, introduced as House Study Bill 313 and Senate Study Bill 1208, makes multiple changes to Iowa's system of property taxes that the lawmakers said would provide an estimated $426 million in property tax cuts. SUPPORT: YOU MAKE OUR WORK POSSIBLE The bill would move Iowa's local property tax system away from assessing properties using rollbacks — a method where the taxes based on the assessed market value of a property is limited based on the statewide aggregate property values. Instead, Iowa would use a 'revenue-restricted system,' Dawson told reporters Thursday. The bill would create a new schedule of assessment limitations and a 2% growth factor restriction, based on the fiscal year's actual property tax dollars that have been certified for a local property tax levy. While the change would mean property owners pay more taxes based on the value of their property, Dawson said the revenue restriction 'buys down that rate.' 'Without a revenue restriction, it's going to be a windfall to local governments, which will be a shellacking to our property taxpayers,' Dawson said. 'This all has to work in unison. So at the end of the day, this is going to be property tax relief for Iowans, but not one of these parts will come out of system.' The system change would be phased in over five years. Kaufmann said the change would help address problems local governments have with the rollback system and would provide more certainty for local jurisdictions as they plan budgets over the long term. 'The number one thing I have heard with my visit with local governments has been that they have no predictability in what the revenues are going to look like,' he said. 'They have to wait for the rollback to come in, in December. And trying to plan out responsibly, two years, three years, four years, five years — next to impossible in the current system.' The system also shifts funding from Iowa's system of tax credits back to the state, which Kaufmann said would go toward about $400 million in school funding coverage through the state that is currently allocated through local property taxes. 'We're spending hundreds of millions of dollars on these credits right now,' Kaufmann said. 'Without their existence, we can reappropriate those dollars for direct property tax relief.' Other components in the legislation include a $25,000 property tax exemption for homesteads and a property tax freeze for seniors over age 70 who have incomes at 250% or less than the federal poverty level. The legislation has been anticipated as Republican leaders at the Statehouse have repeatedly stated that property tax changes will be a top priority in the 2025 session. The lawmakers said the new measure builds off of the 2023 property tax law that capped levy rates for cities and counties. Rep. Dave Jacoby, D-Coralville, said Iowans should be 'extremely skeptical' about the property tax proposal. 'Over the last decade, every attempt by GOP lawmakers to fix Iowa's property tax system has failed,' Jacoby said in a statement. 'Property taxes just keep going up every year, especially for homeowners. House Democrats believe we need to put money back in the pockets of homeowners and renters immediately.' While the measure was introduced Thursday, there will likely not be movement on the bill through the committee process for several weeks. Kaufmann said the bill was introduced this week in order to give time to local governments, schools and other impacted entities to review the legislation and give feedback to lawmakers on how best to proceed with potential changes. 'How those conversations turn out, what feedback we get, may result in some changes to the bill,' Kaufmann said. 'We're not dropping this out and saying, 'This is perfect, as is, this will pass out of subcommittee next week.' This will be a thoughtful process, that will take up the most the rest of the session, to make sure that we get it right and understand all the impacts.' SUPPORT: YOU MAKE OUR WORK POSSIBLE
