District 53 Representative Dean Fisher (Republican)

The House took last week, Week 16, off as the Senate caught up with their work, then we came back this week and began passing budget bills in preparation for the end of session.

Property taxes have been one of the hottest issues we’ve heard about from our constituents this session as assessments have hit the mailboxes, shocking most property owners. The legislature does not directly control local government spending (county, city, schools, townships), so it’s difficult for us to put hard and fast limits on those entities since every one of them is different. However, we have heard the cries to reign in the growth in property taxes and we have acted with House File 718.

This bill provides property tax relief for landowners by curbing the budget growth of local governments without discouraging economic development. It does this by lowering the growth rate used to determine spending and by consolidating, capping, and recalculating certain levies. Those numbers will be lowered, delivering tax relief each year, using the formula below. This bill lays the groundwork for how to responsibly deliver even bolder reform in the future. The growth rate reductions outlined below sunset after four years, which allows two rounds of assessments for the legislature to analyze the effects and then require legislators to act further.

Counties: For the General Basic County Levy of $3.50/$1,000 Rural and the Basic County Levy of $3.95/$1,000: If a county’s taxable valuation grows by 6% or more then the growth rate is reduced by 3% and the levy is recalculated. If a county’s taxable valuation grows by 3 to 5.99% then the growth rate is reduced by 2% and the levy is recalculated. If a county’s taxable valuation grows by less than 3% then there will be no recalculation. Levies not impacted are: pioneer cemetery, debt service, EMS, law enforcement, flood and erosion, and natural disaster.

Cities: For General Basic City Levy of $8.10/$1,000: The cities follow the same growth rate reduction formula outlined above for counties. The bill also consolidates 15 special levies into one new capped levy. Levies not impacted are: municipal transit, aviation authority, insurance premiums, local emergency management, EMS, liability, debt service, IPERS, law enforcement, police/fire retirement, agricultural land.

This bill also provides direct and immediate tax relief for seniors and military veterans. For all Iowans 65 and older, it creates a new exemption on top of existing tax credits. This exemption will amount to $3,250 for 2024 and $6,500 for 2025. It also turns the current property tax credit for military veterans, which amounts to $1,852, into a larger credit to provide additional relief for Iowa veterans. This new Military Service Property Tax Exemption will total $4,000.

The bill also increases transparency by requiring tax bills to look more like an itemized receipt, showing where your money is going. Certain levies outside of the new consolidated capped rate can be increased if approved by the voters or voted upon by elected officials. This will increase transparency in levy increases.

All elections for bonding must take place in November and require more notice to voters to ensure more Iowans are able to make their voices heard on whether it is a good use of their money. While this may make it more difficult for local entities to pass bonds, the bill also increases the threshold for all bond amounts that must go to the voters by 30%. This threshold has not been adjusted for inflation in 30 years.

As noted, this bill is not the end of the discussion and action on property taxes. It’s just one big step forward. We will be working on it next session and monitoring the situation over the next four years as this legislation plays out.

However, I would caution everyone that they must be engaged with their local governments and making their voices heard about local government spending. Your county supervisors, city councils, township trustees, and school boards are the elected officials that you should be holding accountable for their spending and tax levies.

Hopefully by the time you read this newsletter the session will be over, we have already passed several of the budget bills and hope to adjourn Sine Die by May 5 at the latest.