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Mayors Oppose Senate Republican Plan To Limit Property Taxes

O. Kay Henderson
Radio Iowa
Lobbyists and officials from central Iowa cities speak to lawmakers at the Iowa Capitol about a property tax bill Wednesday, April 17, 2019.

A proposal meant to limit property tax growth advanced at the Iowa Capitol Thursday with the support of Republicans on a Senate committee.

That move came a day after several central Iowa mayors told lawmakers at the Statehouse they don’t want the state to restrict their ability to raise property taxes without first conducting a thorough study of how that could affect different communities.

Ames Mayor John Haila said communities like his have to be able to expand services for their growing populations.

“If this bill goes through, and this cap goes through as it is, we won’t be able to do that. We’re going to have to cap growth,” Haila said. “And I think the concern we have is long-term there may be unintended consequences that end up causing the state to start to shudder and slow down.”

Sen. Randy Feenstra, R-Hull, said he is trying to slow the growth of property taxes and require local governments to take more steps to explain how and why their taxes are increasing.

“That then shows legitimacy and transparency to the taxpayer who is, right now, in the fog,” Feenstra said. “They have no idea. They just know they’re angry, they’re upset, because every time they get the property tax bill there’s an incredible increase. And that’s what we’re here trying to resolve.”

Under Feenstra’s bill, cities and counties would not be able to increase revenue for most city and county services by more than 3 percent each year.

If local officials want to increase revenue more than 2 percent, they need a two-thirds majority to agree on the increase.

Then residents have the option of petitioning for a referendum so that voters could approve or reject growth above 2 percent.

Public pension funds, mental health services, and new construction would not be included in that cap.

Nevada Mayor and Story County Republican Chair Brett Barker said he supports what lawmakers are trying to accomplish, but he urged them to study how this would affect cities and counties before making major changes.

“It’s a complicated system, and there’s no simple solution. And so we’re afraid of some of those unintended consequences,” Barker said. “And ultimately cities aren’t created equally.”

Barker added local officials are in the best position to assess the needs of their communities.

Sen. Pam Jochum, D-Dubuque, said this takes local control away from those officials.

“I believe this bill puts a straitjacket on local governments,” Jochum said. “And I’m just trying to figure out why we think we can budget for local governments better than they can do for themselves.”

Jochum said she likes one part of the bill that would expand a property tax credit for elderly Iowans to keep up with tax increases.

Sen. Jake Chapman, R-Adel, represents Dallas County, the fastest-growing county in Iowa. But he said Iowans are being “taxed to death” and true local control comes directly from the citizens.

“What this bill does is it puts the power back in the hands of the people by having transparency so they know what their local officials are really doing with their property taxes,” Chapman said.

The Senate Ways and Means Committee advanced the property tax bill Thursday on a mostly party-line vote. One Republican lawmaker, Sen. Jeff Edler, R-State Center, voted against it.

House Republicans have advanced their own plan for limiting property tax growth. It does not cap revenue growth at 3 percent. But their plan does allow for residents to petition for a vote on any increases above 2 percent. The House bill also says local governments can’t carry more than 25 percent of their general fund into the next budget year. The Senate bill does not restrict the ending balance.

Republican leaders in the House and Senate said before the legislative session started in January that “reducing the property tax burden” would be a main priority for this year after hearing complaints from voters. But it’s not clear if Republicans in both chambers will agree on a path forward before the legislative session ends.

Katarina Sostaric is IPR's State Government Reporter