Iowa House Republican leaders introduced their property tax proposal Wednesday, which includes a 2% cap on annual revenue growth for cities and counties.
“This plan is not about protecting the status quo for taxing entities,” said Rep. Carter Nordman, R-Dallas Center, who chairs the House Ways and Means Committee. “It’s about creating predictability and protecting the bank accounts of hardworking Iowans.”
The bill (HSB 596) would prevent city and county revenue from growing more than 2% each year. The limit would not apply to new construction, school funding or revenue that’s required to repay debt. This aligns with the revenue cap proposed by Gov. Kim Reynolds.
House Republicans also proposed exempting the first $25,000 of every residential property’s value from taxation.
“It gives relief to seniors. It gives relief to the working families. It gives relief to young couples who are buying a new home,” Nordman said. “So rather than just looking at one section, we’re giving relief to everybody.”
House Speaker Pat Grassley said he does not yet have an estimate of how much money the bill could save property taxpayers.
The bill aims to improve property tax information that is currently required to be mailed to taxpayers. It specifies that the notices explaining the tax rates of cities, counties and school districts must be “clear, concise, written in plain language,” and may include tables and graphics.
More bonds payable with property taxes would have to earn 60% voter approval to move forward. And the bill would require the Councils of Governments to help local governments consolidate, share or regionalize services to find cost savings.
Last week, Senate Republicans and the governor each proposed a different property tax bill.
“While there may be three different proposals out there right now, I am confident that we will be able to find common ground and accomplish property tax reform this year,” Nordman said.
Alan Kemp, executive director of the Iowa League of Cities, said he appreciates property tax bills being released early in the legislative session because that gives cities time to evaluate the impact before taking formal positions on the proposals.
He said cities agree that reducing the burden on taxpayers is a worthy objective, and they share the goal of making property taxes more affordable and predictable.
“Cities do have concerns about proposals that place strict limits on local revenue growth, which over time can slow service delivery, delay replacement of aging infrastructure, weaken economic development efforts and reduce communities’ ability to respond to emergencies and natural disasters — especially as costs for materials, equipment, labor and insurance continue to rise,” Kemp said.
He added there are constructive elements in each bill, including the Senate’s proposal to tie revenue limits to inflation, the House’s effort to improve information sent to taxpayers, and Reynolds’ proposed grant program to help local governments share services.
