Republicans in the Iowa Senate have approved another big tax change. This one would use state taxes, rather than local property taxes, to finance the state’s mental health system.
In addition, the bill approved last night would create a new elderly property tax credit for low income Iowans age 70 and older and get rid of a property tax levy in 27 school districts that’s used to maintain playgrounds and pay for other community education programs.
It also would end state payments to schools, cities and county to compensate for lowered commercial property tax rates. Senator Dan Dawson, a Republican from Council Bluffs, said due to rising home prices, Iowans are facing higher property taxes and this legislation will help reduce those bills.
“We did not come here to do halfsies,” Dawson said. “We came here to do bold reforms and this bill, in its entirety, is bold reform.”
Last month, Senate Democrats joined Republicans in endorsing a different bill to get rid of the state inheritance tax and speed up income tax cuts, but Democrats voted against this latest Senate GOP tax package. Senator Joe Bolkcom, a Democrat from Iowa City, said county property taxes used for mental health services are a more reliable funding source than appropriations approved by the state legislature.
“If this legislation, for some reason, becomes law, it will result in defunding of our mental health system,” Bolkcom said.
House Republicans have expressed caution about making major tax changes this year, due to the economic uncertainty caused by the pandemic. Governor Reynolds has joined a lawsuit over a provision in the latest federal pandemic relief package that some have interpreted as impeding state efforts to cut taxes. Senate Republicans estimate the bill they passed last night would eventually reduce property taxes statewide by $100 million.