A property tax bill that would limit local property tax revenue growth to 2% a year has cleared the Iowa House.
“We are simply asking for the same fiscal discipline from our governments that our citizens practice every day,” said Representative Carter Nordman of Dallas Center, the Republican who led debate.
The plan would exempt the first $15,000 of a home’s value from taxation and eliminate the homestead tax credit. State funding for that credit would be sent to public schools and reduce the property taxes Iowans pay to local school districts by around $150 million next year.
Nordman said initial estimates indicate Iowa homeowners would save $4 billion over the next six years if all of the bill’s provisions becomes law. “For too long our property tax system has put certainty for government budgets over certainty for family budgets. Today we flip that script,” Nordman said. “…This is not a Band-Aid or temporary relief, this is major relief that provides predictability for the taxpayer.”
House Democrats offered an alternative that was rejected by Republicans, then several Democrats criticized the House GOP’s plan. Representative Larry McBurney, a former member of the Urbandale City Council, said the bill won’t lower Iowans’ property taxes. “We are not taking a truly comprehensive approach to property tax reform,” McBurney said. “All we are doing is kicking the can down the road with this piece of legislation.”
Representative Adam Zabner, a Democrat from Iowa City, said local governments will be able to go around the limit by raising fees and going deeper into debt that must be repaid with property taxes. “This bill will not lower property taxes. It won’t,” Zabner said. “It’s just more politics.”
Representative Ken Croken, a Democrat from Davenport, said the 2% cap threatens funding for police and fire departments. “Back away from this ill-conceived plan that will not deliver the goal we seek,” Croken said. “The people of Iowa deserve better.”
Senate Republicans have taken a different approach on limiting local government budgets and their property tax plan passed the senate earlier this month with wide bipartisan support. Senate’s Republican Leader Mike Klimesh said Iowa “is one of the worst states for property tax burdens” and he is optimistic lawmakers will find a compromise “that provides relief to the Iowans desperately asking for it.”
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