Iowa House and Senate pass dueling bills to cut property taxes. Here's what each would do:
House and Senate lawmakers have passed competing bills to cut property taxes as they seek to reach a deal to lower Iowans' tax load and rein in spending growth.
Iowans have seen skyrocketing home assessments this year as the value of their property has rapidly increased, and the Republican proposals are seeking to make sure those higher assessments don't result in spiking tax bills for homeowners.
More: Huge property tax reassessments — some increasing by $100K or more — are hitting Iowa homeowners
Both bills received nearly universal support in their chambers, indicating a bipartisan interest in lowering property tax bills.
But neither the House nor Senate version is likely to become law in its current form. Republicans in both chambers are still seeking to find a compromise.
Here's what each property tax proposal would do:
Senate proposal would consolidate city levies and limit spending growth
The Senate's wide-ranging property tax cut bill would limit how much local governments can spend and provide new property tax exemptions for seniors and veterans.
The Senate voted 48-1 Wednesday to pass Senate File 569. Sen. Herman Quirmbach, D-Ames, was the lone no vote. Sen. Cindy Winckler, D-Davenport, was absent.
The Senate bill would consolidate several individual tax levies for cities into each city's general services levy, which is capped at $8.10 per $1,000 in taxable value. Some individual levies would be eliminated and others would remain uncapped.
For counties, the county general services levy is capped at $3.50 per $1,000 in taxable value and the county rural services levy is $3.95 per $1,000.
Sen. Dan Dawson, R-Council Bluffs, said too many local governments are spending beyond what should be their maximum levy, causing Iowans' property taxes to go up.
"We have to defend the Iowa taxpayer out here because this system is broken and it needs reform," Dawson said. "And I wouldn’t ask my colleagues to put an extra dollar in that barrel until we fix this levy system."
The bill contains a mechanism intended to reduce spending by cities and counties and bring them back within the general levy maximum, thereby lowering property taxes.
If cities or counties are spending beyond their maximum levy rate, their budget would be limited to 3.25% growth year over year. If the government's spending is less than the maximum, its budget could grow by 2.5%.
Consolidating levies for cities and counties will result in $45 million in property tax relief statewide, according to a news release from Senate Republicans.
The Senate bill also provides an additional $6,500 homestead property tax exemption for Iowans 65 and older. And it more than doubles a property tax exemption for veterans by increasing it to $4,000 in taxable value beginning in 2024.
Those two changes will result in $57 million in property tax relief, according to the news release.
Sen. Pam Jochum, D-Dubuque, said Democrats also want to streamline the state's complicated property tax system and make it more transparent, while making sure that the state is providing services to taxpayers.
"We want to continue working with you across the aisle because every one of us — every one of us — cares about this tax system and wants to make it work better," Jochum said.
The Senate bill also eliminates a school infrastructure levy called the Public Education and Recreation Levy, or PERL, which is used by 29 school districts around the state to pay for things like playground equipment, after-school programming and adult education.
House passes separate property tax cut that would lower school levy, cap tax bills' growth
House lawmakers are moving forward with their own property tax bill, which takes a different approach from the Senate.
The House voted 93-1 Wednesday to pass House File 718. Rep. Michael Bergan, R-Dorcester, was the lone no vote.
More: Iowa House proposes a $200 million property tax cut and a 3% cap on your bill's growth
Rep. Bobby Kaufmann, R-Wilton, the floor manager of the House bill, said lawmakers are listening to everyday Iowans who are concerned about their bills.
"We have heard you," he said. "We have heard you as you stated that property taxes are easily the most unpopular tax that exists. We have heard you that your bills and your valuations have exploded in growth. We have heard you when you’ve had to say that you’ve had to make decisions on whether to pay your property tax bill or other equally important bills."
The House proposal would provide a roughly $200 million property tax cut statewide by lowering the $5.40 school foundation property tax levy to $4.40 per $1,000 of taxable valuation. The state would pick up the cost of the property tax reduction.
The legislation would also limit the amount that Iowans' individual property tax bills can increase by 3% per year for homes and agricultural properties, and 8% per year for commercial and industrial properties.
Newly constructed buildings or homes that undergo renovations such as redoing the kitchen or adding a new room would see an increase in their tax bill that is equal to the additional value of the property, for that year only. In future years, that property's tax bill would again be subject to the cap.
The bill would also contain new requirements for transparency in property tax bills and would require bond elections to be held at the same time as general elections.
House Democrats said the bill will help ease the tax burden on middle-class Iowans.
"We’ve had many failed tax policies over the last 13 years, policies that did not help our everyday Iowans," said Rep. Dave Jacoby, D-Coralville. "This, I believe helps everyday Iowans and Democrats are happy to see that our ideals are being met in this bill."
Stephen Gruber-Miller covers the Iowa Statehouse and politics for the Register. He can be reached by email at sgrubermil@registermedia.com or by phone at 515-284-8169. Follow him on Twitter at @sgrubermiller.
This article originally appeared on Des Moines Register: Iowa House and Senate pass different bills to cut property taxes
