Lawmakers address various options for property tax reform

The complex subject of property taxes has dominated discussion during this year’s Iowa legislative session and was the first topic raised last Friday during a legislative coffee at the 5x80 Golf Course near the Greenfield/Guthrie Center exit on Interstate 80.

The event featured Rep. Ray “Bubba” Sorensen, R-Greenfield, and Sen. Amy Sinclair, R-Allerton, who answered questions from constituents.

Sorensen said the House, Senate and Gov. Kim Reynolds have all released property tax reform proposals, and the three plans share several similarities.

According to the governor’s website, her proposal would:

• Move property tax assessments to every three years

• Limit tax increment financing to public purposes within infrastructure, redevelopment and economic development areas and set a 20-year project time limit

• Freeze property tax bills for homeowners age 65 and older who live in homes valued at $350,000 or less

• Expand tax-deductible savings accounts for first-time homebuyers

• Create a $10 million grant fund to help local governments consolidate positions and pursue shared-services agreements

• Eliminate election mandates for county treasurers, auditors and recorders

• Set a goal of allocating 30% of SAVE funds to property tax relief by fiscal year 2030

Sorensen outlined key points of the House proposal.

“It forgives the first $25,000 on every house and has a 2% cap. It leaves out schools,” he said.

Iowa Capital Dispatch reported Jan. 12 that the Senate proposal would change the state’s rollback system so property taxes are calculated on the full value of a residential property, paired with measures to offset the cost. The plan would increase the homestead tax credit to 50% of a home’s taxable value, remove taxes for older homeowners and set limits on how much levy rates can increase each year.

“I’m trying not to be married to any of the proposals because it doesn’t get hot and heavy until we’re through the funnels,” Sorensen said. The funnels — set for Feb. 20 and March 20 — are self-imposed legislative deadlines used to eliminate bills that lack sufficient support to advance.

“I’m assuming it’s going to be a conglomeration and push-together of all three — maybe not to bring overwhelming property tax relief, but to at least stabilize it and bring a ton of transparency,” Sorensen said.

Sinclair said that while some leaders believe House File 718 has limited local decision-making by city councils and county supervisors, the Senate proposal includes features that are intended to take a more “holistic approach” to address those concerns.

The senator lives in Wayne County, and she shared that her five-bedroom, three-bathroom home that is newer than 25 years old, has property taxes of about $2,600 per year. She said she’s not complaining about that amount. Her county is known as one of the “Dirty 30,” which means it has tax rates above newly-mandated caps designed to curb high property tax burden.

“We just don’t have the valuation down there to support those hard caps on the levies. Rolling my house back 25% is a lot different than 25% on a house in the burbs,” Sinclair said. “Having a statewide solution is not always the right answer. We ask you to be patient with us in the sausage making because those things do exist in proposals and may be part of the final product.”

Sorensen described property tax reform as almost a “lose lose.”

“There’s almost no way to get a full win,” he said. “Like I’ve said many time, the state does surgery with a sledgehammer and local cities and counties can do it with a scalpel. That’s where the decisions need to be made.”

Other topics brought up during the coffee were eminent domain, transfer on death, mental health, chemical drift and kratum.