A bill that would require cities and counties to approve by a two-thirds vote any property tax increase over 2 percent was passed by the Legislature last week and early this week awaited the signature of Gov. Kim Reynolds.
Senate File 634 was approved by the Senate on a 33-17 vote late April 24 before it was approved in the House on a 53-46 vote early morning, April 25.
Labeled as a “transparency bill” by its sponsors, Republican Sen. Randy Feenstra, of Sioux City, and Rep. Lee Hein, of Monticello, the property tax levy that local governments set, which is based in part on property assessments, would need to be finalized at a public hearing established under new rules.
If the levy generates property tax revenue increases of 2 percent or less, local government will need a majority vote to pass the measure — a higher percentage would require a two-thirds majority vote.
Currently, cities’ property tax levies are capped at $8.10 per $1,000 of taxable assessed valuation and counties have a general fund cap of $3.15 per thousand and a rural levy cap of $3.95 per thousand.
However, Sen. Herman Quirmbach, D-Ames, said the bill won’t have much of an impact on Ames and Story County, due to their government configuration and open transparency with taxpayers and residents.
“I think, frankly, this is an unnecessary bill, that had a lot taken out of it,” Quirmbach said last week. “Earlier versions of this bill received some strong pushback from local officials against what could have been extraordinary interference from the state on local government. But I see this current bill having little to zero effect on Ames.”
Stricter measures, such as language that would put a 3 percent hard cap on increases, and allow for a reverse referendum from voters on any property tax increase, was removed from the bill.
Proponents of the cap said it was necessary to address complaints from Iowans frustrated when they see their tax bills go up, even when local levies remain constant or decline.
In the lead up to last week’s votes, the House bill was amended heavily as it drew fierce opposition from local officials, citing that their proposal would limit the capacity to expand services as populations are growing — especially in central Iowa communities.
Story County Supervisor Rick Sanders, a Republican, said the bill is a “watered-down version” from prior language and proposal in companion bill House File 773 (formerly 165).
“Other than passing down an unfunded mandate, having that extra hearing is not going to overly impact our local government,” Sanders said on Thursday. “That said, I’m dead set against this bill, and I think it’s government at it’s worst — and I think it’s making a show of taking away local control.”
Nevada Mayor Brett Barker had a positive view of the extra efforts taken to amend the bill. “I am thankful for the time that our state legislators spent listening and collaboratively working with local elected officials to add additional transparency to Iowa’s property tax system. The bills as initially presented were extremely concerning and we felt strongly they would have unintended adverse consequences for Nevada,” Barker said. “I feel that the final legislation provided mechanisms for transparency while maintaining local decision making.”
*Marlys Barker, Journal Editor, contributed to this story.