This article was published in The Courier.
For years, Iowa property taxpayers have watched their tax bills climb higher while relief remained elusive. Recently though, Iowa lawmakers and Governor Kim Reynolds changed that trajectory with one of the most significant property tax reform bills in state history. The new law, SF 2472, puts taxpayers first, which is a simple but important accomplishment.
Previous reforms largely focused on assessed values and tax mechanics but did not constrain local government spending. For the past 20 years property taxes have increased over 107%, which surpasses the growth of population and inflation. This year, lawmakers decided taxpayers deserved better.
The centerpiece of the reform is a 2% limit on the growth of city and county property tax collections. Rather than allowing an unlimited claim on taxpayers’ wallets, the law establishes a framework that allows revenue to continue growing while protecting property owners from the relentless increases they have experienced for decades.
Some have suggested the legislation will force local governments into austerity. Reality suggests otherwise. Cities and counties will still see property tax revenue growth. They will continue to benefit from new developments. Sales tax revenue and franchise fees can keep growing as before. Certain levies remain outside the cap altogether.
What has changed is not the ability to fund priorities. Instead, the expectation that taxpayers automatically absorb every increase in spending has disappeared. In many ways, local governments now have to operate more like the families and businesses they serve.
When a family’s health insurance premiums increase or their cost of groceries goes up, they cannot simply demand a larger paycheck. They adjust. They prioritize. They distinguish between needs and wants. Businesses do the same thing every day. Government should not be exempt from those realities.
The legislation also makes important changes to economic development programs that have sometimes produced disappointing results. Taxpayers have watched projects stall, lawsuits emerge, and public subsidies become sources of controversy. Greater accountability and more careful use of public dollars should be welcomed, not lamented.
Likewise, the new law brings balance to school funding. For years, Iowa’s 1% sales tax program for school infrastructure, known as SAVE, has helped districts address needs such as roofs, HVAC systems, and other capital projects, while also dedicating a portion of those funds to property tax relief. That program has largely succeeded. Many districts have tackled legitimate infrastructure needs and have now expanded into projects that, while desirable, are not always essential.
School districts and investment banks have a vested interest in maintaining the status quo on SAVE. The program promotes construction and expansion projects even as enrollment declines or remains stagnant in many districts. Rarely mentioned in these discussions is that public education is also the largest single item in the state’s budget too, consuming $4 billion.
SF 2472 strikes a reasonable balance on infrastructure funding by extending SAVE for another twenty years, providing districts with long-term certainty into 2071. At the same time, it directs additional future resources toward property tax relief.
Some districts may find these changes require them to seek voter approval more frequently for major projects. That should not be viewed as a problem. If taxpayers must fund additional spending, obtaining their approval is entirely appropriate. In fact, involving voters more directly strengthens accountability and transparency. The people paying the bills deserve a meaningful voice in deciding when those bills should increase.
Finally, this legislation reflects something else commendable: elected officials keeping their promises.
Legislators from every corner of the state spent years hearing the same message from their constituents. Homeowners, farmers, retirees, and small business owners all wanted relief and accountability. Lawmakers promised to respond and did so with a comprehensive reform package that earned overwhelming support in the legislature this spring, including significant bipartisan backing.
For too long, Iowa taxpayers were expected to shoulder ever-growing property tax burdens. This year, our leaders put taxpayers first. That is something worth celebrating.
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