Property Taxes – You’ve Got Mail

By the time property tax bills show up in an Iowan’s mailbox, the local budgets and levy rates that are fueling that growing property tax burden have already been decided.

 

People are often upset by their property taxes when they receive their annual bill, but there is nothing they can do at that point. By the time the bill shows up in an Iowan’s mailbox, the local budgets and levy rates that are fueling that growing property tax burden have already been decided.

The Iowa Legislature made a great first step in 2019 to address skyrocketing property taxes with the passage of Senate File 634, “Truth in Taxation.” That legislation created an additional public notice and hearing if a proposed city or county budget was going to grow more than 2 percent over the previous year. Unfortunately, local newspaper circulation is dwindling and few taxpayers actively check their local governments’ websites to find the required notices. Only a small number of taxpayers have realized that these hearings are occurring and even fewer have participated in them. Further, the 2 percent growth cap does not factor in the full budget picture, nor does it exclude new growth from the 2 percent calculation, making it difficult for taxpayers who do engage their local governments to get straight answers about real year-over-year budget growth.

The 2019 Truth in Taxation legislation was intended to close the honesty gap between local elected officials and the citizens they represent. When confronting local elected officials about their growing property tax bills, taxpayers are often told by their local elected officials that they did not raise their property taxes because the levy rate did not increase. If assessments are growing and levy rates remain constant, or even reduced slightly, the truth of the matter is that a vote to keep the levy rate the same is a vote to raise taxes. This ongoing problem, despite the 2019 legislation, requires a more robust action from the legislature to close the honesty gap.

The Iowa Legislature needs to address this by automatically resetting levy rates down when assessments increase, forcing local elected officials to vote to increase levy rates. The previous legislation did not provide this level of transparency for citizens.

Most importantly, citizens need to be directly notified when property tax increases are being considered. This could be accomplished by a simple postcard mailed to property owners.

Further, the 2019 Truth in Taxation legislation excluded school districts. While the school funding formula complicates this issue, many property owners pay more property taxes to their local school district than any other local taxing authority. Any conversations about improvements to the 2019 Truth in Taxation legislation should include school districts. School board members should be held accountable by their electorate in the same manner that city councilors and county supervisors are held accountable. The state should require direct notices to property taxpayers from school districts intending to raise property taxes, so local taxpayers can be made aware of the intention, as well as require school boards to send information to local taxpayers about when and where a public hearing on the proposed tax increase will take place, so they may participate.

It is time to improve Iowa’s 2019 Truth in Taxation legislation by resetting levy rates to close the honesty gap and empowering local property owners with direct notification of public hearings on local budget increases and how those increases affect them, so they can make their voices heard.

 

 

 

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