Property Tax Rate Limits

When rate limits apply selectively, taxing authorities can shift responsibilities to those without them. Over time, local government spending goes up, and the intent of the rate limit is negated. Local taxing entities have layered multiple tax levies on each property in addition to general taxation, such as levies dedicated to public libraries, emergency management, debt service, cemeteries, and flood and erosion control. Iowa cities have around 30 different levies, while counties and townships have around 10, and other taxing districts, such as agricultural extensions, county hospitals, and miscellaneous districts, have fewer. Iowa applies the maximum levy rate limit to each individual levy, not on each level of government or in aggregate.  And several types of levies continue without limitations, being permitted at the “amount necessary.”

Local Debt Limits

As of 2021, Iowa’s local governments were carrying a total of $13.8 billion in outstanding debt, of which cities held $7.1 billion, schools $4.9 billion, and counties $1.1 billion. Local taxing jurisdictions should also not be allowed to incur large amounts of debt without a vote of the people. While borrowing small sums may be necessary for emergencies or other unique situations, local boards or city councils incurring debt without taxpayer votes should be infrequent.

“Ratchet-Down” Effect on Local Revenue

Property tax rates are important but advocates often forget that government spending causes higher tax bills. Local governments may even claim they have reduced rates, leaving taxpayers to wonder why their tax bills are bigger. Tax rates only tell one side of the story and can often be misleading. Focusing on revenue controls spending and does not allow local governments to take advantage of windfalls from assessments. More importantly, it forces local governments to be honest.

Local Government Spending Limitations

Spending limits are similar to speed limits in a school zone, both are designed to protect. In the case of local governments, they apply the brakes to slow spending down. BACKGROUND Over the past 20 years, the average annual rate of growth for property tax revenue has been: 4.1 percent for cities, 4.2 percent for county general services, and 3.7 […]

Recent Changes to Iowa’s Property Tax

Even with the extensive reforms as of late and the elimination of the county health levy, property taxes still remain a top concern of taxpayers with much work left to be done.   In 2013, the legislature enacted a comprehensive property tax reform measure directed at providing commercial property tax relief. Some of the major reforms of the legislation included:  […]

Avoiding “Tax Shifts” for a Taxpayer Win

Politicians’ talk about tax relief doesn’t always mean the taxpayer wins in the end. Not all tax relief is created equally, as a comparison of Iowa with its neighbor to the west will show.

Iowa enacted historic tax reforms in March that significantly cut income taxes and reduced taxpayers’ liability. This change was possible because the state had been prudent with its dollars. Iowa did not increase spending, has fully funded reserves, and is experiencing a billion-dollar budget surplus. That is what a taxpayer victory looks like.

Did Your County Pass on Mental Health Savings?

Local governments in Iowa started a new fiscal year on July 1.  Those new fiscal years bring new budgets, and many times, new tax rates.  What’s unique about this fiscal year (2023), however, is that Iowa counties are no longer tasked with paying the bill for mental health services.  One key feature of 2021’s tax relief package was the phase out of the mental health levy from county property taxes, as the responsibility of mental health was shifted from counties to the state.

Guaranteed Income Veers Away From Role of Local Government

This week’s episode of ITR Live included a discussion of the city of Des Moines’s decision to participate in a pilot program that aims to provide guaranteed income to low-income residents of central Iowa.  While this calls to mind Andrew Yang’s universal basic income proposal from 2020’s Democratic presidential primaries, one significant difference appears to be that this program is being driven by mayors across the country, rather than by the federal government.   In a city that already has a heavy property tax burden, the Des Moines City Council has committed $500,000 to a program that doesn’t fit within the traditional role of local government.

Put Tighter Restraints on Local Governments Addicted to Property Taxes

Property taxes are despised. Believe me, I and my organization hear from Iowans of all political stripes about the giant bite property taxes take from family budgets. Now inflation is adding pressure by pushing up the price of gas and groceries, not to mention rising real estate assessments and tax bills.

“It’s Easy” To Spend Taxpayer Dollars

Why do local governments believe they need so much of your money? In recent years, Iowa property valuations have increased considerably. Large valuation increases usually translate into increased revenue for local governments in the form of property taxes. Given the impact of inflation, we can expect this trend to continue.  It will be interesting to see how Iowans manage to bear a growing property tax burden while paying more for gas, groceries, and everything else.

WHO’S GETTING THE BIGGEST SLICE OF PROPERTY TAX PIE?

Iowa has a long history with property taxes and it is one of the most debated issues, even dating back to before statehood. The very first Legislative Assembly of the Territory of Iowa met in 1838 in Burlington, and one of their primary goals was to develop a revenue system. A few short months later the Iowa Territory created a property tax for residents, levied and collected by the counties – a function which the county still performs to this day.

Drive A Tesla, Get Free Property Taxes

Maybe you missed it, but April 3-9 was Affordable Housing Week in Iowa, where one of the main takeaways was that Iowa needs to increase its housing supply. It’s no secret that many states, including Iowa, have a housing shortage. Housing advocacy groups have identified a particular shortage of affordable homes, especially for lower-income Iowa families. In fact, it is such a pressing need that the State has designated $330 million over a five-year period to help aid in the issue.

The Growing Cost of Municipal Debt

With inflation and rising interest rates, it’s normal to worry about the national debt and what that means for our country. But what about Iowa and our local communities?

During the last few years, the state of Iowa tightened its belt and has reduced its overall debt burden. However, the combined total of state and local government debt increased by 5.3% to $18.8 billion in FY2021, the highest percentage increase in a decade.

Benefiting the Few With Resources From the Many

Most citizens expect the property taxes paid to their city to be used for road maintenance, snow removal, building maintenance, and of course, public safety. These activities are all considered core government services and functions. However, in current times we see some of our city governments spending considerable dollars on things that could be better managed by the private sector – and that’s a problem.

Honesty is the Best Policy

Many people have been probably told by either a parent, grandparent, or even a teacher that “honesty is the best policy.” This rule should also apply to local governments. Taxpayers across the country are demanding answers on why local policymakers cannot deliver property tax relief. In response, a growing number of states are enacting strong Truth-in-Taxation laws that force local […]

Amplifying the Voice of the Taxpayer with Truth-in-Taxation

Did you know that in 1934, Iowa implemented the first sales and income taxes to lower property taxes? It is never a good policy to create new taxes or raise existing taxes to reduce another tax and today, Iowans suffer from high property taxes and sales and income taxes. Property taxes in Iowa primarily are the major sources of funding […]

Placing Property Taxpayers First

Last month, Iowans received their property tax bills, and taxpayers across the state keep asking why their taxes increased so fast. It seems more likely that property taxpayers will see Elvis at their local Casey’s before they see any property tax relief. Iowans across party lines and the urban-rural divide want policymakers to stop making excuses for high property taxes […]