Truth in taxation – property taxes

Upmeyer Column: Another busy week in the Iowa House as work on the budget continues to move forward. While some of the finer details still need to be worked out, we are beginning to see the end of this session on policy, budget, and tax issues. I look forward to the possibility of wrapping up our work before May.
When we were talking to Iowans during the campaigns last fall, they frequently brought up property taxes. Often we hear that there is a disconnect between how levies and assessments impact property taxes. But really, it’s all about the budget…bringing transparency to this process is a major priority for us this session. Over the last few weeks, Iowans have been receiving their updated property assessments and many of them are seeing increases of 10 percent or more. While one would think this is a good thing (who doesn’t want their house to be worth more?), it often leads to a large tax increase when local governments keep their property tax levies flat or lower them very slightly even with that growth in assessments. We forget there is no requirement to utilize all of the assessed value to generate revenue.
We read the headlines that the levy rate is staying the same or being reduced slightly and we get excited that our taxes won’t be going up, only to see a dramatic increase in our actual property tax bill.
“I have never had to raise property taxes. The assessor does it for me.” That is how one local government official explained property taxes in their city and unfortunately, this sentiment is fairly common in communities across our state.
The House is currently working to address this issue by providing property taxpayers with more transparency and truth in taxation. Rather than seeing how much money is available and finding places to spend it all, they can start backwards by addressing the actual needs of the budget and then adjust levy rates accordingly. You elect good people to serve as local officials and we know they are working hard to do the job they were elected to do. The legislation that we are proposing provides local governments with an opportunity to look at their budgets in a new way.
We have introduced House File 773, which requires cities and counties to vote to increase their budget by more than 2 percent, which is a reasonable amount of growth from year to year. This ensures that taxpayers and the public are notified and aware of the budget needs of their community, rather than a simple levy rate change. If there is a city project or county-wide need that required a higher investment, the residents are probably very involved in that plan. If the taxpayers are opposed to a higher growth rate, they can organize a reverse referendum to let the public weigh in. The threshold is intentionally high so that isn’t a dilatory tool.
• Not only does this legislation increase transparency for property taxpayers, it also holds local governments accountable.
• Since the bill was introduced, we have taken a lot of time to listen to cities and counties and have made a number of changes to the bill that should address many of their concerns. In my conversations with some city council members, they told me this adds a new perspective to their budget process. We should never be afraid to shake up the way things have been done in the past.
We have also had some folks who have resorted to scare tactics and suggestions that this bill will negatively impact public pensions. Last fall and at the beginning of session, I committed that we would not be making changes to IPERS. That remains true. While I don’t believe that this bill affects IPERS or other public pensions, we will likely offer an amendment on the floor to restate what the code requires on this topic.
The main goal of this legislation is to provide property taxpayers with more transparency surrounding budgets, levy rates, and assessments. It is what Iowans expect and deserve.
I am excited to move this bill forward and give taxpayers a seat at the table.
As always, please keep in touch. As legislation moves forward, feel free to send me comments, questions or feedback that you may have regarding issues before us in the House. I can be reached at lin-da.upmeyer@legis.iowa.gov or 515-281-3521.