Property Taxes

WHO’S GETTING THE BIGGEST SLICE OF PROPERTY TAX PIE?

By Sarah Curry, DBA

Iowa has a long history with property taxes and it is one of the most debated issues, even dating back to before statehood. The very first Legislative Assembly of the Territory of Iowa met in 1838 in Burlington and one of their primary goals was to develop a revenue system. A few short months later the Iowa Territory created a property tax for residents, levied and collected by the counties – a function which the county still performs to this day.

Since that time, property taxes have increased considerably to fund the various levels of local government.  A look at a bit more recent history shows us that when comparing 1977 figures to today, the total amount of property tax dollars collected from citizens in Iowa has increased more than 550% over the last 45 years.

Granted, these are actual dollars that have not been adjusted for inflation, but even when adjusted for inflation the growth is still noticeable. The cumulative rate of inflation over the same time was 374%, meaning total property tax collections are $1.8 billion more today than they would have been if property taxes had only increased in line with inflation.

It’s no secret that K-12 schools take the most property tax dollars across the state, but what is surprising is the local government guilty of the steepest growth over the last half-century are cities, with nearly an 870% increase.

A different approach in evaluating property taxes is to note how the burden of those taxes has shifted among taxing authorities.  While schools comprise the largest piece of the pie, they have dropped from 55% of property tax dollars collected in 1977, to 41% in 2022. Counties, community colleges, and county hospitals have all stayed relatively constant in their respective proportions of property tax dollars.

Cities have experienced the most growth when measured in percentages. Only spending 19.8% of the total property taxes collected in 1977, today cities spend nearly 30% of Iowans’ property tax dollars.

Many Iowans haven’t paused to consider where their tax dollars go after they (or their bank) cut the property tax checks twice a year.   Historical trends can help us understand what areas of government are growing, and how quickly. If you’re interested in learning what makes up the property tax burden in your community, and where those dollars are being spent, go to ITRLocal.org for more information.