The assessed values of commercial and industrial real estate were rolled back as part of 2013’s property tax reforms. To make up for the reduction in property tax revenue, Iowa’s state government “backfills” local governments. More than $152 million is paid to cities, counties, and school districts each year. Wednesday, a House subcommittee advanced a bill to phase out these payments. A similar bill has been introduced in the Iowa Senate.
Each local government is unique. Since the reform:
Many governments now have property tax revenue that EXCEEDS 2013 levels, even without including backfill payments. Some governments also see year to year growth in property tax revenue that exceeds the amount of the backfill. Property tax assessments continue to climb around the state.
The State of Iowa needs to consider its backfill payments within the framework of total property tax revenue growth.
For many local governments, reduced or eliminated backfill payments wouldn’t mean budget cuts, it would mean they will be managing with smaller increases. For local entities who have already been made whole:
- This is not a cut.
- This shouldn’t lead to property tax increases.
- This will slow the growth of spending.
Iowans for Tax Relief believes now is the time to decide how the state is involved in property tax payments.