Controlling Spending Key to Property Tax Reforms

This article was published in the Waterloo-Cedar Falls Courier.

Despite numerous changes, lasting relief has not been delivered and Iowa currently has the 10th-highest property tax burden in the nation.

If you have lived in Iowa for any length of time, then you know property taxes are, without a doubt, the most despised tax in the state. That’s why numerous lawmakers have committed to making property tax reform one of their top agenda items during this legislative session. Property taxes are one of those unique public policy issues that are not partisan; many Democratic and Republican voters in Iowa have agreed that property taxes are too high and need to be fixed.

Iowa’s history is full of legislation attempting to provide property tax relief. In 1934 the state introduced the income and sales taxes to shift the burden away from property taxes. The education state foundation aid formula was adopted in 1971, the residential assessment rollback was created in 1978, various local option sales taxes have been implemented, and in 2013 rollbacks were introduced for additional property classes, all in the name of property tax relief. Despite these numerous changes, lasting relief has not been delivered and Iowa currently has the 10th-highest property tax burden in the nation.

Each of these previous attempts at property tax relief either created a new revenue stream or tried to shift the burden among taxpayers. None of them, however, got to the core of the issue which is government spending. If the Legislature intends to provide property tax relief this session, they must find a way to limit the spending ability of local governments.

To help Iowa avoid reform pitfalls, Iowans for Tax Relief Foundation developed solutions which focus on spending and transparency. These range from robust budget caps and the consolidation of outdated levies (did you know Iowa cities can still levy taxes for a town band?) to additional debt limits and the direct notification of property owners when their taxes are poised to increase.

When some of these solutions threaten a reduction in local government spending, don’t be surprised to hear local officials balk about cuts to police and fire services, or having to leave their snowplows parked all winter long. These scare tactics aren’t new and are frequently used to oppose any changes to the status quo. However, those types of cuts are not reality and are one of the many fallacies floated around during debates about property taxes. In fact, Iowa state law requires local governments to provide many of the core government services we rely upon. When the growth of local government is slowed, functions such as water parks, economic development, art sculptures, and other nice but not essential things will likely be the first items considered when reductions need to be made.

ITRF polling last fall showed a majority of Iowans support the Legislature setting limits on the taxing and spending of local governments. November elections confirmed this when Iowans overwhelmingly supported conservative candidates and by extension the conservative policies the state has implemented over the last few years. It’s time for local governments to go on the same healthy diet the state has been on lately, and wisely discern between needs and wants.

Legislators have made it clear property taxes will be a focal point at the Capitol this year. There is no question spending is the cause of excessive increases. Local governments continue to have control over much of what they spend money on, and if legislators want to implement changes, they need only set new boundaries.

 
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