October 25, 2014

Legislator: “everybody gets something” in property tax reform proposal

Key statehouse leaders say the public may soon be able to see details of a wide-ranging property tax reform plan. Legislators and the governor have been haggling for the past 16 months over those details, but Senate Democratic Leader Mike Gronstal says negotiators are “fairly close” to a deal.

“It’s kind of like people standing on the top of different mountains,” Gronstal says. “They look at each other and they see this big chasm between them, but if they just look down they see this fertile valley of common ground, and that’s what we’re trying to do.”

According to Gronstal, nobody gets everything they want, but everybody gets something. “Governing is about finding common ground and I think Iowans expect us to reach across partisan divides and look for solutions to problems,” Gronstal says. “We’re working on a property tax concept that embodies elements, in essence, of everybody’s discussion.”

Negotiators say an income tax cut geared to low income Iowans that Democrats favor will be part of the package, along with a tax break for those who own apartments and condos in Iowa. The main part of the package, though, will reduce commercial property taxes by 250-million dollars over the next several years, one of Governor Branstad’s priorities.

“We have, essentially, an agreement with the leadership on what needs to be done and it is a compromise, but it is an important step forward,” Branstad says. “Failing to do that would be a really big disservice.” The governor says it would be a “tragic mistake” for legislators to fail to embrace the package, which would also limit an expected increase in residential property taxes. And Branstad accuses local government officials of standing in the way of property tax reform.

“They see a big tax windfall by not doing anything and they’ve been successful in stopping things from happening year after year after year,” Branstad says. “…That’s the dirty secret is they want a big windfall and if they can stop the legislature from doing anything, then they see a big tax windfall. That’s not fair to the taxpayers of this state.”

City officials have argued that there will be a tax shift from commercial to residential property if the governor’s plan wins approval. Commercial and industrial property owners in Iowa pay taxes on 100 percent of the property’s assessed value, while residential property owners pay taxes on less than half of their assessment.