Last week, Iowa House Republicans released House Study Bill 165, a property tax reform bill, creating a city and county budget limit.
The budget limit will:
- Limit annual budget growth to household income growth
- Set an annual growth factor of no less than 1 percent
- Apply to the total property taxes collected for the county general and rural levies and the general fund for cities
- Provide recommendations for county and city budget reform, which recommend local governments reduce their ending unreserved fund balances
Property tax levies exempt from the limit include:
- Public education
- Emergency services
- New construction
- County mental health and disability services
- County debt service
- County capital improvement funds
If a county or city wishes to override the budget limit and raise taxes, local governments must follow a public notification and public hearing process to justify the increased spending. After that process, if the local government still chooses to exceed the limit, citizens would have the right to call for a reverse referendum (putting the increase to a vote of the people) if they disagree with local elected officials’ actions.
HSB 165 is a step in the right direction to control the growth of property tax bills for all Iowans. It will take property tax increases off of autopilot due to increased assessments.