Property Taxes

Put Tighter Restraints on Local Governments Addicted to Property Taxes

By Chris Ingstad

Property taxes are despised. Believe me, I and my organization hear from Iowans of all political stripes about the giant bite property taxes take from family budgets. Now inflation is adding pressure by pushing up the price of gas and groceries, not to mention rising real estate assessments and tax bills.

Of course, increasing assessments don’t have to mean an automatic increase in property taxes. It would just require more self-control on the part of local officials to keep property taxes down. Unfortunately, decisions being made by at least three local governments in central Iowa make us skeptical that self-control is going to arrive anytime soon.

Polk is our state’s most populous county by far, meaning decisions made by its supervisors impact considerably more Iowans than any other single local government. The supervisors seem intent on illustrating why property taxpayers may never get relief without additional limitations being imposed by the Iowa Legislature.

Last year, state lawmakers passed a reform that removed the mental health levy from county property tax rolls.  In Polk County, that meant 38 cents of every $1,000 of assessed value didn’t need to be collected or spent by the county anymore. Yet even after the state began picking up the tab, the county could deliver only a 36-cent savings to its taxpayers.  The Iowa Legislature tried to provide property tax relief, but Polk County is standing in the way.

Mental health savings aren’t the only way Polk County could ease costs for its residents.

The American Rescue Plan Act, or ARPA, has allocated over $95 million to Polk County and local governments have considerable latitude on how they spend that money, including reducing taxes. Polk’s supervisors mistakenly believe they can't cut property taxes with ARPA funds. This misunderstanding likely stems from a controversial ARPA provision that attempted to stop state governments from using the relief funds for tax cuts. While that issue is still being settled in the courts — in fact, a federal judge blocked the controversial provision last fall — there has never been a similar constraint on local governments. Sources as varied as the National League of Cities and Tax Foundation have both stated there is not a prohibition on local governments cutting taxes. Polk County absolutely has the right not to cut property taxes, but to claim tax cuts are prohibited is incorrect and misleading.

The city of Des Moines is employing a different strategy with property taxes. The city is handing out nine years of property tax abatements for luxury townhomes priced at $1.3 million each. All this really means is the burden for every other resident of Des Moines will be that much heavier. Since the mere existence of abatements acknowledges tax bills are a problem, elected officials should work to reduce the bills for everyone instead of distorting the market by handing out breaks to a select few.

Just south of Des Moines, Warren County leaders are displaying apathy about a $10 million overrun for the county's Justice Center.  As the new jail gets ready to open in the county seat of Indianola, one supervisor succinctly explained how the county would afford the additional cost: "When our tax revenues and property valuations are going up every year, it's easy."  It’s good to know the reason property tax bills go up is because local officials think it makes their jobs easier.

There are 134 Iowa House and Senate seats up for election in November.  You can be certain candidates in those races will hear about property taxes over and over as they knock doors throughout the summer and fall. When the Legislature convenes again next January, lawmakers should consider a whole menu of options to restrain local governments — everything from enhanced transparency measures, to spending caps, to reforming the use of abatements, incentives, and tax increment financing should be on the table. Iowans who feel like they are being priced out of their homes deserve it.