Property taxes increase because local government spending increases, and it is too easy for local elected officials to increase spending.
Lawmakers should look at the many local property tax levies and the limits on those levies. Additionally, lawmakers should consider harder caps on the growth of local budgets. In 2019, the Iowa legislature adopted a two-percent soft cap on the growth of local budgets, but this can easily be exceeded with a super-majority vote of the board or council with an additional public hearing. Further, new growth is not separated from valuation increases on existing properties, so communities experiencing significant growth regularly exceed the two percent of allowable growth without any additional transparency on budget implications for owners of existing properties.
Lawmakers should exercise extreme caution regarding absorbing existing levies into the state general fund. When Iowa lawmakers voted to remove the county mental health levy and fund it at the state level in 2021, 48 of Iowa’s 99 county boards of supervisors did not pass that cost savings on to their property taxpayers. When this happens, it makes income taxes more difficult to cut in the future because it absorbs more general fund dollars while generating little or no savings for property taxpayers—meaning that many Iowans will have to pay more in taxes than they otherwise may have.