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Iowa Senate, House pass competing property tax relief bills

iowa flag in front of iowa capitol dome
John Pemble
The Iowa Senate and House passed competing bills Wednesday aimed at providing property tax relief.

The Iowa Senate and House passed competing bills Wednesday aimed at providing property tax relief as Iowans face rising property valuations.

Both bills passed with nearly unanimous support, 48-1 in the Senate and 93-1 in the House.

But House and Senate Republicans have yet to reach an agreement on property tax policy that they could send to the governor’s desk to become law.

Sen. Dan Dawson, R-Council Bluffs, said the Senate billis a first step toward controlling county and city spending and protecting property tax payers.

“Ultimately, I think we’ve probably got the best dog that can hunt here in the capitol that we’ve had in some time to start to tackle this system,” he said.

Senate GOP leaders said their bill would provide about $100 million in property tax relief. That includes $57 million from changing the veterans and seniors property tax credit to an exemption, $45 million from city and county levy changes, and $4.5 million from eliminating two levies.

It would also consolidate several levies and put a hard cap on city and county budget growth in order to prevent major increases in Iowans’ property tax bills.

Sen. Zach Wahls, D-Coralville, said people on fixed incomes struggle to pay property taxes as they increase, and Democrats want to provide relief by supporting the bill.

“We also want to make sure that our cities and counties and school districts are able to provide the level of services that our constituents need in order to have access to those essential services—police, fire, public safety and education,” he said.

The bill would also require local governments to provide information by mail on their spending and how it affects property tax rates.

It would remove the voter-approved public education and recreation levy that’s used by school districts. There are 29 school districts that use it. Bill would allow school districts to use other funds to maintain those facilities and programs.

Democrats proposed an amendment to keep that levy as an option, but the amendment failed.

What’s in the House bill:

The House bill would provide an estimated more than $200 million in property tax relief by reducing an education levy and replacing that funding with money from the state’s taxpayer relief fund.

It would prevent an individual’s residential or agricultural property tax bill from increasing by more than 3% per year, with some exceptions.

Commercial and industrial properties would have their tax increases capped at 8% per year.

Rep. Bobby Kaufmann, R-Wilton, said it’s a response to concerns from everyday Iowans.

“We have heard you that your bills and your valuations have exploded in growth,” he said. “We have heard you when you…say that you’ve had to make decisions on whether to pay your property tax bill or other equally important bills.”

Rep. Dave Jacoby, D-Coralville, said the bill would help everyday Iowans.

“This puts a cap on those taxes, but also puts a soft cap, one that local governments and school boards can work with to make sure that their budget meets the needs of the community,” he said.

The bill would also require property tax bills to include tax rates and local budget information, and all elections for bonding would be moved to November.

House and Senate Republicans said they are continuing to discuss property tax policy, but it's not clear if or when they will reach an agreement.

Katarina Sostaric is IPR's State Government Reporter