Late last month, Iowa Governor Kim Reynolds (R) signed into law legislation establishing new taxpayer protections relating to the growth of property taxes. While public officials deserve credit for moving this legislation into law, the momentum never would have begun -- or been sustained -- without the efforts of state powerhouse organization Iowans for Tax Relief (ITR), a longtime ally of NTU.
Iowa is among the states with the highest per capita collections of property taxes in the United States. Thankfully, Governor Reynolds and the Legislature listened to the drumbeat of taxpayers demanding action and enacted real reforms to the property tax process. Yet, as NTU’s experience with successful pro-taxpayer movements demonstrates, drumbeats must be sustained and echoed to be effective. That’s where ITR, over its decades-long history, has proven its mettle. Proportionate to its home-state population, ITR is among the largest state-level taxpayer groups in the country.
Ballooning property tax bills have taken a bigger bite out of family budgets, dampened small business growth, and weakened the viability of family farms in the 21st century. ITR estimated that total property tax collections in Iowa have increased by more than 100 percent between 2000 and 2017 - more than double inflation and population growth. As the growing assessments and soaring property tax bills of recent years demonstrated, the current system can create uncertainty and hardship for Iowa taxpayers and the overall economy. Amid these trends, ITR built the case with elected leaders that citizens wanted change. One tool was polling: more than two-thirds of Iowa voters wanted the Legislature to take action and address the issue during the 2019 session. Other important elements of the grassroots campaign included talk radio, connecting everyday taxpayers with their lawmakers, public forums, and research demonstrating Iowa’s deteriorating competitiveness because of burdensome property taxes.
After contentious debate on what a final reform package should look like, requiring adroit lobbying on ITR’s part, the Legislature agreed to compromise and passed many meaningful reforms. Under the newly enacted law, a new layer of transparency and accountability is added to what has traditionally been an opaque process. Now, any property tax rates anticipated to increase collections by more than two percent year-over-year must be adopted by a two-thirds vote of the local governing body, and only after a public hearing. This is known as a “soft cap,” as property tax collections will be capped at two percent, unless a supermajority of the local governing to suspend the cap for the year.
In a joint letter to the Legislature earlier in session, National Taxpayers Union and Iowans for Tax Relief advocated for these specific provisions. In our letter, we recommended the lawmakers enact a cap on future property tax revenue growth while also setting a supermajority override mechanism. These new protections will shield Iowa’s families and businesses from rising, unaffordable property tax bills, while also reining in local government spending and force them to make the tough choices for funding priorities.
This legislation comes on the heels of the largest tax cut in Iowa history and marks the second consecutive year Governor Reynolds has signed legislation that will have a positive impact on taxpayers.
NTU has proudly worked with Iowans for Tax Relief during more than 30 years. This latest victory for limited property taxes is just one of many ways the organization has changed fiscal policy in the Hawkeye State for the better. We salute our friends at ITR for a job well done!