Senate committee advances compromise property tax bill

by Robin Opsahl, Iowa Capital Dispatch
May 1, 2023

House and Senate Republicans spent most of the 2023 legislative session pursuing differing plans on how to lower property taxes. But as lawmakers look toward wrapping up session in early May, Gov. Kim Reynolds and Republican legislative leaders announced they have reached a compromise on property taxes.

The Senate Ways and Means Committee approved House File 718 in a Monday meeting, with an amendment that ballooned the 30-page bill to 74 pages.

Sen. Dan Dawson, R-Council Bluffs, said there’s “nothing new” in the amended legislation. It draws from both the House bill’s original language and the Senate’s proposal, Senate File 569, on changes to cities, counties and school districts’ property tax systems.

Provisions include consolidating 15 existing Iowa city levies into a general fund system and setting limits on county levy rate growth. The bill also would require local governments to put excess revenues from assessed valuation growth toward a “buydown” on general basic levies. It also adds senior homestead and military property tax exemptions.

Dawson thanked Republican leaders for “genuine and positive discussions” as well as Democrats for providing input leading to the final agreement.

“We heard from Iowans about the need for property tax reform, and those echoes only became louder as the recent round of near-record valuation letters went out to Iowans this last month,” Dawson said. “The amendment before this committee today is a culmination of six subcommittees, five committees and two floor votes combined from both sides, the Senate and the House.”

While Democrats largely supported the amendment, Democratic Sens. Cindy Winckler and Herman Quirmbach criticized Republicans for putting forward the amendment less than an hour before the committee meeting. The public had no opportunity to weigh in on the agreed-upon language, as it was released after the Senate subcommittee meeting Monday morning.

Quirmbach, an Ames Democrat, said lawmakers were not able to consult the local governments in their legislative districts on the bill’s impacts before voting on it, and had concerns about the effect on localities’ ability to provide needed services. He passed on the bill, not voting for or against.

“With regard to the haste with which this amendment — this very sizable amendment — has been brought forward, I think it’s really reckless for this to move so quickly,” Quirmbach said. “If it’s such an important bill, and such an important issue, then it deserves more time for consideration.”

Dawson said all of the provisions included in the bill have been parts of legislation which passed through the subcommittee and committee processes in the House or Senate, meaning the public has had the opportunity to comment on the changes proposed in the amended legislation. He also disagreed with Quirmbach about local government officials’ having the final say on property tax changes.

Republican lawmakers have pointed to the decision by some Iowa local governments not to lower property taxes when the state took over funding Iowa mental health services in 2021. Dawson said this bill is a way to guarantee that property tax cuts result in lower costs for a property owner.

“Ultimately when we talk about property tax reform, we know that we can mess with rollbacks, we can mess with assessments, we can do a variety of things,” Dawson said. “But if you’re ultimately going to protect a property taxpayer, you have to look at how those revenues are collected, and make sure that excess revenues like we’re seeing this year are somewhat insulated, and excess revenues are returned back to the property taxpayer via a buydown levy rate, which is what we have here today.”

Sen. Pam Jochum, D-Dubuque, said Senate Democrats are in favor of the legislation, as it provides relief to middle-class Iowans. She said the bill’s transparency measures, which require local governments to post more information on their plans to take on debt, will give Iowans better insight on what their tax dollars are going toward, while continuing to provide the services and amenities their communities depend on.

Jochum said in a statement she was pleased to see bipartisan cooperation on property taxes after a “difficult and divisive” session.

“The property tax agreement announced today is an important, needed step forward that will provide real relief for the taxpayers who need it most,” Jochum said. “Big corporations and the wealthiest Iowans have gotten their tax cuts – it’s about time the middle-class caught a break, too.”

The bill must next clear the Iowa Senate, and go back to the Iowa House for a review of the amendment before heading to Reynolds. Senate Majority Leader Jack Whitver, House Speaker Pat Grassley and Reynolds released a joint statement Monday praising the agreement. According to the news release, Republicans expect the legislation will result in $100 million in property tax relief for Iowans.

Reynolds linked the bill to the state government reorganization plan signed into law earlier this session, saying she was committed to reducing government costs in Iowa.

“My commitment to cutting taxes for the hard-working people of Iowa has never been stronger,” Reynolds said in a news release. “After enacting the largest tax cut in state history last year, I’m proud to work alongside the House and Senate to begin property tax reform this year. Earlier this session, I signed legislation to make state government more efficient, effective, and less expensive for Iowa taxpayers. This serves as a model for local governments, and property tax reform is a good first step.”

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