Key Republican lawmakers have developed a plan they say would be the biggest property tax overhaul since 1977.
“In previous years, anytime we’ve done property tax legislation it’s been culling around the edges, tinkering within the current system, making incremental improvements to the current system and this bill takes a completely different approach,” said Representative Bobby Kaufmann, a Republican from Wilton who is chairman of the House Ways and Means Committee.
Senator Dan Dawson, a Republican from Council Bluffs, is chairman of the Ways and Means Committee in the Iowa Senate. “In the end, this is going to be the largest rebuild of our system,” Dawson said this afternoon. “And the reason why we’re doing it is not because we would like to do it, but Iowans told us we need a better property tax system.”
The plan would erase a series of property tax credits the state finances. Dawson told reporters the state could then increase funding to schools and lower the amount of taxes property owners pay to their local school district.
“Iowans will get a $400 million dollar property tax cut through basically the state assuming a greater portion of school funding. Every homestead in Iowa is going to get a $25,000 property tax exemption on their home,” Dawson said. “Seniors who are 70 and above who are at a certain income level will get a property tax freeze here.”
Veterans would get property tax break as well. The bill would control how much revenue local governments get from property taxes by setting a 2% cap on property tax valuations of residential, commercial and industrial property. Kaufmann said additions and new construction would make a property subject to a bigger increase.
“If you’re a local government, we heard a lot of concerns about being able to capture new growth,” Kaufmann said. “That is permissible in this so long as you’re talking about new buildings, not remodels, but buildings that are new.”
The bill also ends the so-called “roll back” that connects property tax values throughout the state. Critics say it has given Iowa’s growing cities an advantage, while penalizing property owners in small towns. Dawson and Kaufmann indicated it will be at least two weeks before legislators schedule public meetings on this plan to give Iowans a chance to review it.