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'The Watchdog'

Property Tax Reform Bill Details

posted on February 22, 2019

Property Tax Reform Bill Introduced

Last week, Iowa House Republicans released House Study Bill 165, a property tax reform bill, creating a city and county budget limit.

The budget limit will:

  • Limit annual budget growth to household income growth
  • Set an annual growth factor of no less than 1 percent
  • Apply to the total property taxes collected for the county general and rural levies and the general fund for cities
  • Provide recommendations for county and city budget reform, which recommend local governments reduce their ending unreserved fund balances

Property tax levies exempt from the limit include:

  • Public education
  • Emergency services
  • New construction
  • County mental health and disability services
  • County debt service
  • County capital improvement funds

If a county or city wishes to override the budget limit and raise taxes, local governments must follow a public notification and public hearing process to justify the increased spending. After that process, if the local government still chooses to exceed the limit, citizens would have the right to call for a reverse referendum (putting the increase to a vote of the people) if they disagree with local elected officials’ actions.

HSB 165 is a step in the right direction to control the growth of property tax bills for all Iowans. It will take property tax increases off of autopilot due to increased assessments.

Inheritance Tax

Currently, Iowa’s inheritance tax may be driving the final nail into the heart of the family farm or small business.

SF 307, a bill that would completely eliminate the inheritance tax has cleared two hurdles in the Iowa Senate and is now eligible to be voted on by the full Senate. A similar bill, HF 438, has been introduced in the House.

Iowa is punishing people who, for whatever reason, do not have children of their own or choose to leave their assets to a non-lineal relation or business partner. This could result in the closing of a small business or the sale of a family farm due to insufficient liquid assets to pay the inheritance tax. This isn’t the outcome tax policy should strive to achieve.

This bill becomes eligible for debate on Monday.

Stopping Medicaid Abuse

The Iowa Senate Labor Committee has sent SF 334, a bill providing additional oversight of Medicaid and other public assistance programs, to the Senate floor.

Senator Jason Schultz said, “Iowa taxpayers should be defended. Not simply: ‘Oh, you don’t qualify anymore,’ but no, we’re actually going to go and look for people who are taking your money and using it incorrectly.”

Nearly one out of five Iowans receive Medicaid benefits, and it is the second largest budget driver for Iowa. Regular audits are needed to protect taxpayer dollars and ensure benefits are applied only to those who truly need the services.

Other states that have implemented Medicaid recipient audits found considerable fraud. Louisiana, for example, randomly checked 100 Medicaid recipients and discovered that 82 of them no longer qualified for benefits. Arkansas removed 25,000 receiving benefits in multiple states.

When fraud occurs in any public assistance program, it not only hurts those who truly need the services, but it fleeces the taxpayers.

This bill is eligible for debate on Tuesday in the Senate.

Occupational Licensing

This week the Wall Street Journal’s Editorial Board published an opinion piece (Arizona Occupational Welcome-Subscription Required) that discussed Arizona’s efforts to make it easier to work and start businesses there.  The most recent step the Arizona legislature has taken was the introduction of legislation that would recognize other states’ occupational licenses even if those other states do not reciprocate.  Past legislation that became law in Arizona has included the recognition of out-of-state licenses for military spouses, the waiver of licensing board fees for workers who are below 200% of the poverty level, and the easing of regulation for workers with a criminal record as long as there was no threat to public safety.

The Wall Street Journal articles points out that Arizona’s population growth can be at least partially attributed to a better regulatory climate that welcomes workers to that state with open arms.  Iowans for Tax Relief has been supportive of HSB 180, an occupational licensing reform bill introduced in the Iowa House of Representatives this session.  Reform that ensures occupational licensing isn’t excessive or overly burdensome can lead to job creation, more entrepreneurial opportunities, reduced prices, and increased incomes.  These positive outcomes are all a result of cutting the bureaucratic red tape tax that is  job licensing.

We Have Iowa Covered

Iowa is covered with snow right now, but the state is also covered with our message of how to control property taxes.

Last week, the Des Moines Register published an article co-written by Americans for Tax Reform President Grover Norquist and ITR President Chris Ingstad on the need for property tax reform in Iowa.

This week, Jonathan Williams, Chief Economist and Vice President for the Center for State Fiscal Reform at American Legislative Exchange Council (ALEC), had an opinion editorial written with ITR Policy Director John Hendrickson published in three Iowa newspapers.

Read the articles:

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