Governor Reynolds and leaders in the Iowa House and Senate have proposed reforms to the state’s property tax system. While their approaches differ, they share a common goal: reducing the property tax burden on Iowa residents. Local government officials, however, have raised concerns about how these changes could affect their ability to fund existing services.
The political tension is easy to summarize.
As one county leader put it:
“Property taxes have risen in Iowa faster than many families’ incomes. We need to protect those families from being taxed out of their homes.”
Meanwhile, a former mayor has warned:
“This is really the state getting involved in local politics. That’s going to impact everything from police and fire to public works. Essentially, the state is taking away local governments’ ability to do their jobs.”
So, what is the actual balance of power between the state and local governments in Iowa?
In short, local governments face two key limitations:
• They may levy taxes only as expressly authorized by the state legislature.
• They may not exercise powers that conflict with state law.
Ultimately, the state defines what local governments can and cannot do, while allowing some flexibility to make decisions within those boundaries.
Two governing principles shape the relationship between state and local authority: Dillon’s Rule and Home Rule.
Dillon’s Rule, named after Iowa Supreme Court Justice John F. Dillon, holds that local governments derive their powers from the state legislature. In an 1868 opinion, Dillon wrote that municipalities “owe their origin to, and derive their powers and rights wholly from, the legislature.” This concept was later affirmed by the U.S. Supreme Court and became a foundational principle nationwide. Dillon’s Rule states local governments possess only the authority that the state legislature grants them; if a power is not clearly authorized, it is presumed not to exist.
Home Rule, by contrast, grants local governments a degree of autonomy. Under Home Rule, cities and counties may manage local affairs without explicit legislative approval so long as their actions do not conflict with state law.
In 1968, Iowa voters adopted a constitutional amendment granting limited Home Rule authority to cities and counties. Often described as “legislative home rule,” it shifted day-to-day governing flexibility to local officials while keeping ultimate authority, especially over taxation, with the legislature. It’s important to note that school districts were not granted the same constitutional Home Rule authority.
Local officials are correct that they are legally required to provide certain essential services. For example, cities must provide fire protection, and Iowa courts have affirmed that they must also ensure police protection, either directly or through agreements. Other mandated responsibilities include road maintenance and certain public boards.
These obligations require funding.
However, not all local spending is mandated. Many services provided by cities and counties fall outside of core legal requirements. For example, there is no state requirement for local governments to fund economic development programs (such as abatements, grants, or marketing), build swimming pools, operate golf courses, support public art, develop recreational trails, or promote tourism.
At its core, the property tax debate is about priorities.
Just as families must budget for essentials before discretionary spending, governments must do the same. Core services like public safety and infrastructure, including road maintenance, should come first. Amenities and optional projects should follow only after those needs are met, and only if taxpayers are willing to support the higher costs. Iowans are not asking local governments to do less; they are asking them to prioritize better. Limiting property tax growth does not eliminate essential services, it encourages a renewed focus on what matters most.
Print a PDF