Republicans on a senate committee have advanced a bill to phase out $150 million in annual state payments to cities, counties and school districts.
The payments were promised in 2013 to make up for the cut in commercial property taxes that state lawmakers ordered. Senator Charles Schneider, a Republican from West Des Moines who is chairman of the Senate Appropriations Committee, said “no one realistically expected” the state to keep making these payments.
“No matter what we pass, local governments certainly won’t be happy about this,” Schneider said this afternoon. “I think the approach we’re taking here today is fair and reasonable and gives local governments time to adapt.”
The phase out would begin in July of 2019. For areas of the state were commercial property taxes are more robust, the state payments would be eliminated in three years. Slow-growth areas of the state would have six years to adjust to the end of this state support.
Senator Joe Bolkcom, a Democrat from Iowa City, said many cities and counties will be forced to raise taxes on homeowners and farmers to make up for the declining state payments.
“The Republican Caucus has had a lot of bad ideas this session and this might be one of the worst ones,” Bolkcom said. “This is a huge broken promise to local governments.”
House Speaker Linda Upmeyer says she and other Republicans in the House are interested in phasing out these payments, but are still considering various options for accomplishing that goal.
Lawmakers are hoping to conclude the 2018 legislative session this weekend.