Direct notification is an aggressive transparency measure forcing local governments to be honest with taxpayers about how their property tax bills will be affected by potential spending increases. Iowans are frustrated with high property taxes, but very few understand the complexity of the system. In 2019, the property tax transparency and accountability law required each city and county to hold a public hearing focused on the proposed budget and total property taxes needed to fund that budget. Information about this hearing such as the date, time and location are required to be published and posted on the local government’s website, social media accounts and the local newspaper.
Financial questions that directly affect property taxes and determine some of the most-important decisions affecting local property taxpayers should be held during general November elections when voter turnout is highest. The Iowa Constitution mandates that the general election be held on the first Tuesday after the first Monday in November of each even-numbered year. This includes county officers, such as auditor, sheriff, treasurer, recorder, county attorney, and supervisors, as well as nonpartisan offices, including public hospital trustees, soil and water conservation commissioners, county agricultural extension councils, and township officers. City and school elections are held on the same day in November, except in odd-numbered years.
All counties should have the same uniform presentation that contains the amount owed, compared with the previous year, and a list of all levies, broken down by the relevant authorities to provide taxpayers with a complete picture of their tax bill. The Iowa State County Treasurer’s Association provides property tax information for all 99 counties. Taxpayers can simply click on their counties and enter their information to view their property tax bills.
Taxpayer dollars should be used to advance the public good, not to bankroll lobbyists who advocate against taxpayers’ interests. Taxpayer-funded lobbying is when political subdivisions such as counties, cities and school districts, pay lobbyists with money they have received from taxes. This can include membership fees in government sector lobbying associations like the Iowa League of Cities, Iowa Association of Counties, and the Iowa Association of School Boards. It can also include local governments hiring and contracting with lobbyists directly. For instance, in 2022 Linn, Marion, and Polk counties spent a combined $190,000 on lobbying.
Local governments may be tying up property tax dollars with needless incentives while further saddling residents and businesses with growing tax burdens. Urban renewal programs shouldn’t be utilized in areas that are already growing or on projects that would occur without a subsidy anyway.
Urban renewal areas have existed in Iowa since 1957, and the designation can allow governments to finance public infrastructure, redevelop slums or blighted areas, or (very broadly) promote economic development. Local governments have several tools at their disposal to accomplish those goals, with tax increment financing (TIF) being a common one.
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.”
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.
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.
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 […]
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: […]
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.
In 2021, Governor Kim Reynolds and the Iowa Legislature worked to addresses high property taxes across the state with the passage of a measure which realigned the mental health funding system from local counties to the state budget. Historically, Iowa has been the only state in the nation to fund mental health programs through local property taxes. This resulted in a large […]
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.
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.
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.
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.
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.
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.
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.
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.
Obvious statement up front: Almost no one likes paying taxes.
But Iowans understand taxes provide for the vital services and infrastructure we all depend on. Property taxes, specifically, are a dependable way to collect revenue and they encourage less evasive behavior than income and sales taxes.
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 […]
Government spending is at the heart of sound public policy. But out-of-control spending for decades has created substantial economic destruction and ongoing threats that must be remedied before things get worse. Fortunately, we have examples of how fiscal rules can solve this problem. We must put these rules into place before our economy gets any worse.
Nothing from the local elections here in Iowa, nor races across the country, will have changed the perception that this political environment is toxic for those who want to push a tax and spend agenda. Tuesday’s elections in Iowa and across the country are now in the books. Iowa voters went to the polls to elect candidates to school […]
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 […]