Local Government Property Tax Collection in Iowa

Local governments have a tax and spend mentality. For long-lasting property tax relief to occur, the state legislature must focus on reining in overall spending rather than reconfiguring how spending is done.

Conversations about property taxes frequently focus on one of the major taxing bodies: cities, counties, or school districts. And rightfully so, as those three types of local governments alone make up over 90% of the total property taxes collected in Iowa. However, there are more local government entities that use property taxes, including community colleges, county hospitals, and townships, among others.  When tallied up, the total property tax dollars paid in Iowa last year amounted to $6.7 billion.

If that sounds like a lot, it is. On the national scale, Iowa’s property tax collections suggest the 10th highest tax rate. Even other measures, such as property tax collections per capita and as a percentage of personal income, rank Iowa in the top third.

Many of us are upset our property tax bills continue to increase year after year, and when one considers the data, it is easy to see why. The Department of Management has historical uniform property tax collection data by entity. In that 40+ year span, statewide property tax collections have only decreased twice: the total amount collected went down by nearly 2% in 1988 and 1% in 1997. This painful experience has taught us to expect a growing tax bill every year, regardless of what our local elected officials may try to tell us.

When property tax collections are actually reduced, it has typically been due to legislative reform or structural tax changes, not simply good stewardship from local governments. Counties saw a reduction in property tax collections in 1996 when the mental health levy was reformed. The last time schools reduced their property tax collections was 1997, when the legislature created a statewide levy for schools in an effort to equalize funding across the multiple districts. Cities, for their part, haven’t reduced their overall property tax collections since 1988, which was the year personal property was removed from the tax rolls, likely impacting cities the most.

All these taxing entities have the ability to reduce their property tax collections on their own. The only time they do so, however, is when the legislature forces a change. The numbers tell the story. Local governments in Iowa are collecting $6.7 billion — a number that will continue to grow unless the legislature steps in again with spending restraints. Even then, history tells us local governments will continue to grow their taxes and spending.

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