Property Taxes

Protection for the Taxpayer

During the 2019 Iowa legislative session, the legislature passed a property tax accountability and transparency law. This new law was modeled after Utah’s Truth-in-Taxation law, which is considered the most “taxpayer friendly law.” The 2019 law requires local governments such as counties and cities to hold a public hearing if the proposed budget increases more than two percent (school district funding is exempt from the two percent limitation) above the previous year, and a super-majority vote for the increase to be enacted. This new two percent “soft cap” is meant to control the growth of property taxes and requires local governments to provide more transparency within the local budget process.

 

The goal of this law is to not only require more accountability and transparency within local government spending but also prevent local governments from claiming windfalls from increased assessments. If assessments increase by 10 percent, it does not mean local governments should automatically receive a 10 percent budget increase.

The rising cost of property taxes are a concern for both individuals and businesses across Iowa. Often blame is placed on county assessors for high property taxes. A reason for this is the fact that taxpayers receive an assessment notice in the mail and are angry because of the increase in property values. Property is assessed upon market values; the source of high property taxes is government spending. Unless spending is controlled, any property tax relief will be limited.

 

 

The objective of property tax reform should not be to single out certain classes of property or to favor one class of taxpayer over another, but rather ensure all Iowans receive tax relief.

 

How can Iowa provide property tax relief for all Iowans?

 

 

Direct Notification: Taxpayers deserve to know how much their actual property tax bill will increase. Local government should be required to send a letter to taxpayers explaining how much their property tax bill will increase. A crucial aspect of Utah’s law is a direct notification requirement, which is sent to taxpayers and provides information on the proposed tax increase. It also includes the date, time, location of the Truth-in-Taxation budget hearing. This extensive public notification and hearing process is successful and taxpayers in Utah actively participate in those hearings.

 

 

Spending Limitation: At the heart of high property taxes is local government spending. Implementing a tax and spending limitation on local governments would help control the growth of property taxes in Iowa. A property tax spending limit would not interfere with the assessment process, but it could control the growth of property tax bills while ensuring local governments have enough revenue to fund key priorities. Spending limits can be designed in several ways, but if a local government wants to exceed the limit, then voters would have to approve the increase during an election. Colorado’s Taxpayers Bill of Rights (TABOR) is considered the strongest limitation among the states.

 

Direct notification and spending limitations can be either implemented together or separately. Both solutions are taxpayer friendly, which means they place Iowa’s hardworking taxpayers first. All Iowans deserve property tax relief and these solutions will help slow the growth of property taxes, while ensuring that local governments are more accountable and transparent to taxpayers.