Iowa legislators are continuing to negotiate on property tax reforms inside the Capitol. A number of factors are being considered to pinpoint why the property tax system has grown overly complicated and unaffordable, and what the best solutions are. There are important pieces of the puzzle that are worth considering—TIF, rollback, and exemptions, among others—but the core driver of the property tax burden must be the central facet of any reform measure: local government spending. As Governor Kim Reynolds correctly stated in her Condition of the State Address, “Spending is what drives taxes—always has, always will. And the most reliable way to protect taxpayers is to limit the growth of government itself.”
Throughout this legislative session, ITR Foundation has been highlighting a common trend across many states when it comes to property tax reform. In both red and blue states, policymakers are introducing some form of property tax cap to control the growth of property taxes. These caps are being applied to various levels of local governments including cities, counties, and school districts.
In Kansas, the legislature recently passed legislation that would allow “residents to sign a protest petition if a local taxing jurisdiction exceeds their revenue-neutral-rate — or previous year’s budget — beyond 3% inflation.” The objective of the legislation “is to slow the growth of local government spending.”
If 10% of registered voters signed a protest petition in a taxing district then it would be deemed disapproved and the taxing authorities budget would revert back to the prior fiscal year’s amount. The measure also strengthens Kansas’s Truth-in-Taxation (property tax statement) notices, which are referred to as “Revenue Neutral Rate Notices” by requiring them to include information regarding the protest petition. This would include a section that taxpayers could submit as a protest petition.
Representative Dan Hawkins, who serves as the Speaker of the Kansas House of Representatives, describes the legislation as “a major step toward reining in out-of-control local spending. This bill finally puts taxpayers in control. If local governments want to raise property taxes beyond reasonable limits, Kansans now have a direct path to step in and stop it,” stated Speaker Hawkins.
In Montana, Senator Wylie Galt is proposing a constitutional amendment that would cap property tax growth at 2%. The proposed amendment would prevent “local governments from increasing the total property taxes property owners pay by more than 2% per year, except for the value of new property or improvements.” Further, the 2% cap would not apply to school districts and voters could override the cap through an election.
“This makes sure that it doesn’t continue to rise at the levels it has been and gives people certainty going into the future, what their property tax bill is going to look like across all classes,” stated Senator Galt.
Kansas and Montana are just two additional examples of states that are considering property tax caps. Both measures have their critics from the local governments who argue that caps will force them to cut vital services, but a property tax cap is best understood as a guardrail. A cap simply slows the growth of property tax collections and helps ensure that local government spending remains aligned with taxpayers’ ability to pay. Across the country, lawmakers are increasingly recognizing that sustainable property tax relief begins with reasonable limits on the growth of government.
As Iowa legislators work toward a final reform package, they are not venturing into uncharted territory. A 2% growth cap is not a drastic or disruptive policy; it is a measured, practical step that reflects a broader national consensus around responsible budgeting and taxpayer protection. When thoughtfully designed, these types of reforms provide predictability for taxpayers while still allowing for local governments to grow their budgets in a way that meets the needs of their citizens.
From Kansas to Montana and beyond, states are moving in this direction. Iowa has the opportunity to do the same, joining its peers in advancing a reform that prioritizes taxpayers, encourages discipline in local spending, and restores balance to a system that has grown increasingly burdensome.
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