The Hawkeye State is on a path of one limited-government-policy victory after another.
This article was originally published by National Review.
When it comes to politics, Iowa is recognized coast to coast for its first-in-the-nation caucuses during election season. When it comes to policy, Iowa has traditionally not been noticed at all. That began to change after the 2016 election brought Republicans unified control of Iowa’s house, senate, and governor’s mansion.
The modest legislation of one of the nation’s most purple states is now giving way to strong conservative reforms. These have set the Hawkeye State on a path of one limited-government-policy victory after another, and policy-makers in other states should take notice.
Certainly, Iowa is not alone in passing headline-grabbing legislation, including in the “economic” area, including collective-bargaining reform, multiple income tax cuts, and universal education-savings accounts (ESAs). Other changes also deserve time in the national media spotlight, including several key components of a property-tax-reform package enacted at the end of this year’s legislative session.
Within months of President Joe Biden’s taking office, the Consumer Price Index (CPI) climbed to levels not seen for 40 years. The effect of this inflationary pressure on real estate put many Americans under pressure as property-value assessments rose and property-tax hikes followed. State governments reacted: Colorado, Idaho, Montana, Nebraska, West Virginia, and Iowa have already enacted property tax–related legislation, with Texas likely to follow.
Where Iowa stands out as the lone exception is its avoidance of the tax-swap trap. Most of these property-tax reforms shift the revenue burden of property taxes onto the state budget and the income or sales tax. Iowa lawmakers instead found fiscally responsible policies that don’t pass the local burden on to state taxpayers.
The intricate details of the reform package straighten out some of the idiosyncrasies of Iowa’s property-tax system, making it more transparent and efficient. For example, consolidating the assortment of levies local governments can impose and requiring direct notification to registered voters about impending tax increases ought to rein them in and ultimately lighten the burden on local taxpayers.
One subtle reform related to elections in particular should become a model for other states. Iowa has moved all municipal bond elections to November-only dates. While the governor and legislators aren’t likely to grab as many headlines with this sort of good-government adjustment as they did with the 2022 tax-reform and universal ESA legislation, its benefit for Iowans may be no less profound.
It may also be a unique feature among the 50 states, most, if not all, of which allow local bond referenda to be held outside of the familiar November timeframe. Consequently, local governments around the country may schedule elections in the spring or summer, when voter turnout is typically lower, increasing their chances of passing potentially unpopular measures. As they focus their efforts on mobilizing small-but-dedicated groups of voters and other individuals with a vested interest in a proposed project, proponents of bond issues have an even greater turnout advantage if the broader public is not expecting to vote. Headlines and election statistics show that both the media and the general public tend to overlook these elections.
Research by Iowans for Tax Relief Foundation demonstrates that voter turnout in elections taking place outside of November is typically less than half the traditional November results. Consequently, Iowa’s local governments have been able to amass $14.5 billion in outstanding debt, mostly paid with local property-tax dollars. Some cities in Iowa have debt burdens amounting to more than $16,000 per capita, and school districts are carrying more than $30,000 per student.
The November requirement works in combination with another unique mandate that each bonding jurisdiction send direct notification to registered voters, making citizens aware of elections, their details, and their effects on taxpayers’ bank accounts. While some other states and local governments send ballot guides, they rarely require any notification for local bond elections.
When it comes to taxes, local bond issues are too often ignored, despite their cost and potential to strangle funding for basic government services. Advocates for smaller, more efficient government need to do a better job educating the public about the principles of prudent finance, but first they must ensure that people know when to vote.
Iowa has ensured that the entire country knows when we are choosing whom we want to represent each party in elections for president. Knowing when a local government is trying to saddle local families with millions of dollars in debt is important, too, and Iowa’s first-mover status recognizing this priority in 2023 should draw just as many eyes as our election season will in 2024.