Tax Cuts Are Not the Problem

Instead of crying wolf every time a minimal amount is cut from their revenue growth, local governments should rein in their spending.

The dust hasn’t even settled on a new property tax law that provides tax breaks to seniors and veterans and local governments are already crying wolf.

An article published by Axios Des Moines claims the new property tax exemption for seniors aged 65 and older along with veterans will break the bank for Iowa cities and counties at a cost of $57 million in statewide lost revenue once fully implemented. For context, Iowa cities alone are expected to collect $1.6 billion in property taxes during 2023.

It might be déjà vu for some who have been following what’s been going on in Des Moines this year. Remember the property tax rollback calculation mishap earlier this year that caused cities and counties to say they couldn’t function with the reduction in property taxes? The Des Moines city manager said the cut would not allow their current funding to ‘maintain existing service levels’ while Pleasant Hill’s mayor was upset they weren’t going to get all the revenue growth they had anticipated. The total impact from that legislation was $133 million statewide and the media was unable to find any substantial reductions in services resulting from that tax reduction.

It’s worth keeping in mind that these “cuts” local governments talk about usually aren’t even cuts at all- it’s just a reduction in their revenue growth.

To add to this ridiculous claim that local governments are going to cut services – did you know cities and counties have billions in reserve funds they can spend on anything they choose? That’s right, cities are currently sitting on $1.1 billion in reserve funds and counties have $650 million.

It’s time local governments stopped crying wolf every time property taxpayers get a break from their excessive spending. Huge reserve funds and record-breaking debt levels ($7.5 billion) are just two examples of how some local governments have been living high on the hog. The legislature is simply trying to help Iowans keep more of their hard-earned money.

There are undoubtedly going to be more new stories about how the legislature is hurting local communities by reducing property taxes. Instead, the stories that need to be told are of Iowans who want property tax relief and want local government spending reined in so they can live their lives without the burden of excessive taxation. A recent ITR Foundation poll found an overwhelming 67% of Iowans support limits on how much local governments can tax and spend to control the growth of property taxes.

The boy in the story who cried wolf did not see a happy ending and that is exactly what could happen to greedy local governments if they do not learn to rein in their spending and stop complaining every time a minimal amount is cut from their revenue growth. Local communities should be focusing on core government services like public safety and road maintenance instead of running municipal pools and building sports stadiums. Maybe if they realign their mission to the proper role of local government, then property taxes will not be such a costly issue and reductions can occur without preposterous claims.

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