Iowa lawmakers reach pivotal deal to cut property taxes by $100M. Here's how it would work:

Republican state lawmakers have struck a deal to limit the growth of Iowans' property tax bills and provide tax cuts for military veterans and seniors.

Republican legislative leaders estimate the legislation will result in a $100 million property tax cut statewide.

Lawmakers have said property taxes are a priority issue to address this year to prevent Iowans' skyrocketing home assessments from resulting in dramatically higher tax bills for homeowners.

More: Iowa House and Senate pass dueling bills to cut property taxes. Here's what each would do:

Last month, the House and Senate passed two different plans seeking to rein in property tax growth. The deal Republicans struck Monday is a combination of the two proposals.

The bill would consolidate several individual tax levies for cities, limit revenue growth for cities and counties and provide new property tax exemptions for veterans and seniors.

The measure was filed as an amendment to House File 718. It passed the Senate Ways and Means Committee Monday afternoon and could receive a final vote as soon as Tuesday.

What would the Iowa property tax bill do?

A central feature of the bill would limit how much money cities and counties can take in each year and require them to channel excess funds into lowering property taxes.

The bill divides cities and counties into three tiers, based on whether their revenue grows by less than 3% annually, between 3% to 6% or above 6%.

And it establishes a new formula that requires local governments to use some of the excess growth to reduce property taxes to bring them back to maximum tax levy levels set in Iowa law.

For cities, the bill would consolidate 15 individual tax levies into a general services levy for that city, which is capped at $8.10 per $1,000 in taxable value.

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.

Iowans have been receiving new property tax assessments in the mail this spring. The taxes on those assessments won't be due for another 18 to 24 months. By then, Republicans expect the new limitations to blunt the growth of those tax bills.

The bill 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.

More: Which Des Moines metro areas saw property assessments jump most? These maps will show you:

Senate Republicans previously estimated that those two changes will result in $57 million in property tax relief.

Cities and counties would also gain new options for assessing fees as a way to provide alternate revenue streams.

The bill would also increase the spending thresholds that trigger a bond election, allowing cities and counties to spend 30% more than they can currently before they have to take the project to voters for approval. The spending thresholds were last raised 30 years ago, lawmakers said.

The bill also contains new requirements for transparency in property tax bills and would require bond elections to be held at the same time as general elections.

What are people saying about the property tax bill?

Gov. Kim Reynolds and House and Senate leadership released a joint statement Monday afternoon announcing the deal.

"My commitment to cutting taxes for the hard-working people of Iowa has never been stronger," Reynolds, a Republican, said in a statement. "After enacting the largest tax cut in state history last year, I’m proud to work alongside the House and Senate to begin property tax reform this year."

Senate Majority Leader Jack Whitver, R-Grimes, called the bill "the most significant property tax reform in our state's history."

"We heard the urgent concerns of Iowans about rising property assessments," Whitver said in a statement. "This agreement delivers on our promise to protect homeowners from huge property tax increases."

House Speaker Pat Grassley, R-New Hartford, said House Republicans heard from their constituents "that property tax relief must be a top priority."

"This is a good first step and we will continue to work hard to provide certainty and relief for Iowa taxpayers," Grassley said in a statement.

The deal is likely to receive bipartisan support when it reaches a vote in the full Senate and House. The property tax cut packages previously passed by both chambers had the support of nearly all Democrats.

Sen. Pam Jochum, D-Dubuque, said she's glad Democrats and Republicans could come together to address rising property taxes.

“The property tax agreement announced today is an important, needed step forward that will provide real relief for the taxpayers who need it most," Jochum said in a statement. "Big corporations and the wealthiest Iowans have gotten their tax cuts — it’s about time the middle class caught a break, too."

"Under this agreement, cities and counties will be able to provide the essential services that Iowans rely on, while also providing transparency to help taxpayers understand what they’re paying and what they’re getting in their local government budgets," Jochum added.

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 GOP reaches property tax cut deal to lower bills for seniors, vets