Last week, Iowa legislators passed a property tax reform bill aimed at limiting the out-of-control increases of property tax bills.
On KCCI’s Close Up, Amanda Rooker, KCCI Chief Political Reporter, sat down with Chris Hagenow, ITR President, to discuss the new legislation’s impact on Iowans. Below is a transcript of their conversation:
Will This Reform Lower Property Tax Bills?
Rooker: Well, your group (ITR) has been pushing for, you know, specifically property tax cuts for a while. There was a lot of debate over this. The main piece of this, though there are lots of changes, is a hard cap. Practically, will we see lower property tax bills for homeowners?
Hagenow: Yeah, you’re going to see that for three main reasons. One is when we talk about a 2% revenue cap, which is slowing down the rate of growth in local government budgets. They have other revenue sources besides property taxes to draw on as well. Second, the changes to the school funding formula, where we won’t pay as much in property taxes for our K-12 education system, and third, the expanded exemption for your homestead. So, there are multiple reasons why you’ll see an impact now, and then you’ll see bills not grow at grow as fast into the future.
Rooker: I know it’s hard to determine just because cities and counties are different all over the state, but for a homeowner who wants to know what can I practically expect for my tax bill — I mean, how much relief are we talking here?
Hagenow: That’s the hard part about all this, because every home is different. We all have multiple taxing jurisdictions: your city, your county, your school, and so on. So, it is all different, and we’re going to try to work through all of that and what it means. You almost have to look at a per-parcel level and run those numbers. But it will be meaningful as you see cities and counties across the state trim back and start setting priorities. That is how you get relief: by local government spending less.
Is Continued Reform Needed?
Rooker: We didn’t end up seeing a change to the rollback or, you know, there’s a 10%, I believe, change to tax exemptions, but does your group feel like this is a first step and there needs to be more, or are you content with where things are right now?
Hagenow: Iowans for Tax Relief believes the rollback system is a good taxpayer protection because we often see assessment valuations go up, which shocks us, but the rollback insulates us from having to pay that increase. So, we’d like to keep that system. There are other ways to do it, but it’s not a necessary next step for us on rollback. We’ve been having property tax conversations in the state of Iowa for 100 years. I doubt this is the last one, but it is a really good step towards saving Iowa taxpayers some money.
The Impact on Local Governments
Rooker: We just heard from some city and county leaders concerns that this could impact, you know, local services, even things like public safety. And what is your expectation about what these changes could mean for public services?
Hagenow: Well, I would hope it means that we’re going to save some money on it because that’s the whole point, right? It is asking governments to set priorities to separate wants versus needs. Not everything a local government does is necessary. It might be good, it might be valuable, but what we want to really do is reframe this whole question: make Iowa taxpayers, make Iowa family budgets what is most important, not their government’s budget.
Increased Transparency
Rooker: Now we only have a little bit of time left, but another thing we heard from lawmakers was a desire to make this whole system more transparent and predictable for taxpayers. Is there anything in this legislation you think will do that?
Hagenow: Yeah, there is. The notification statements have been confusing. Now, they’re going to clean them up, and they can be delivered electronically. The fundamental piece of information Iowans need is not rollback formulas or millage rates. We just want to know what the bill is. How much will I be asked to pay next year? If we inform individuals so they can make decisions and use that to be more involved in their local government, which is the key to all of this, is getting more Iowans engaged at the local level, so they get the government they deserve.