By Sarah Curry, DBA

In 2019, Iowa lawmakers passed a property tax accountability and transparency law. Any city or county government with a proposed budget increase of more than 2% above the previous year must now hold a public hearing first. Then, if the elected body still wishes to raise taxes after holding that hearing, it must achieve a supermajority vote of its members.

While this law is a good start, huge property tax increases in recent years prove that more needs to be done to slow the growth. ITR Foundation is both monitoring legislators’ plans to “give teeth” to the 2019 reforms and investigating other states with similar laws on the books. Nebraska, for instance, just implemented a tax accountability and transparency policy, so we traveled to Omaha for the first related public hearing.

Douglas County is home to 13 political subdivisions subject to the new law, and nine of them were seeking increases high enough to participate in the joint public hearing. More than 100 people attended.

Each government body gave a very short presentation justifying its proposed increase, almost all of which were very high: The city of Ralston asked to increase its collections by 7.7%; Metro Community College wanted an 8.4% increase; and Bennington Public Schools stepped forward for a bold 13.5%. Many cited inflation or the need to increase salaries. Another common target for blame was some other entity that was forcing the jump, such as pointing out changes the state made and how that might have forced the local entity to increase spending.

The tone of the hearing quickly changed when taxpayers gained the floor for their comments on the proposals. Many taxpayers questioned government’s demand for more money when the people’s paychecks weren’t covering the increased cost of gas and groceries. Seniors and those on fixed incomes said these tax increases make it hard for them to live. One testified, “My tax went up 8.1%, and my social security doesn’t go up that much.” A military veteran asked, “Are you trying to tax me out of my home?”

Several people called out local government officials for promoting the fact that they weren’t raising the levy rate and claiming that meant they weren’t actually increasing taxes. “We are not fooled by the calculation of ‘Oh, we haven’t raised the levy,’” one woman said. “You don’t need to when the valuation goes up. It’s one times the other. It’s pretty simple ... cut back on what you’re doing.”

In the end, after more than 50 people gave their comments, one clear explanation for the increases remained: government spending. Taxpayers asked the schools to focus on the classroom instead of building new facilities. They asked cities to stop raising salaries and to focus on expenditures like roads, instead. A round of applause followed one taxpayer’s declaration, “There is no incentive for government to cut spending — you [government] must increase your budget every year or you’re afraid you won’t get any more money.” Not one taxpayer at the hearing spoke in support of the property tax increases.

Iowa can learn from other states like Nebraska, Utah, and Kansas. The latter two states have particularly strict laws that automatically reduce property tax rates when valuations increase so that total collections are held constant. Iowa should strengthen its 2019 law, too, ensuring that the budgets of local governments only grow when truly necessary.

Inflation and supply chain woes are forcing Iowans to make tough choices in our personal budgets. Why shouldn’t our local governments do the same?