Local government officials warn property taxes on homes and farms will rise if a $150 million annual state payment to cities and counties ends.
State lawmakers ordered a 10 percent cut in commercial property tax rates in 2013 and the state payments were promised back then to make up for lost local tax revenue. House Republicans have crafted a proposal to gradually eliminate those payments over the next four years. A House subcommittee hearing was held on the bill this afternoon.
Lucas Beenken of the Iowa State Association of Counties said going from $150 million in state support to zero in five years will be a huge hit to local governments.
“Far too rapid to be able to just absorb without raising property taxes significantly or looking at cuts in services,” Beenken said.
Robert Palmer of the Iowa League of Cities said while some urban and suburban areas have seen development and growth in property taxes, much of the state has not.
“Many more areas across the state still need the attention of the state legislature,” Palmer said.
Some officials are asking legislators to give cities and counties the authority to levy new property taxes specifically for police and fire department budgets. Others say the cuts Iowa lawmakers ordered in property taxes on apartment buildings have been a hardship and should be repealed.
“Those are large users of our services,” said Doug Struyk, a lobbyist for the cities of Des Moines, Iowa City and Waukee which are home to large tracts of apartments. “There are students who go to school there. There are domestic problems that happen there. They certainly use a lot of our roads and infrastructure, yet we have declining revenue coming from those areas.”
Community colleges eventually would lose $3.5 million in state support annually under the House GOP’s plan. Public school districts would be impacted, too. Josh Hughes, president of the Interstate-35 School Board, said his district would take a $20,000 hit.
“That’s more than half of a new teacher’s starting salary,” Hughes said.
House Appropriations Chairman Pat Grassley told reporters Republicans will consider all the input and the plan could be delayed a year. However, Grassley said legislators still need to act this year — even if the reduction in state support doesn’t start until July of 2020. Grassley said that would give local officials enough time to cut budgets or raise taxes to adjust to reduced state support.