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Unanimous support for property tax reform. Where did it happen?

posted on March 22, 2019

Property Tax Reform Passes… in Nebraska

Yes, it can happen! Lawmakers from both parties can agree with each other and create real property tax protections.

A bill to prevent property tax bills from automatically increasing has been UNANIMOUSLY approved by Nebraska’s legislature.

Property taxpayers in both Iowa and Nebraska have seen significant valuation increases in recent years. Local governments have been able to raise property taxes almost automatically, even if property tax rates stayed the same or were reduced less than the increase in values.

Nebraska’s reform would end that practice. Now, as their valuations increase, rates must fall by the same percentage. If local boards in Nebraska want to tap into any property tax increase resulting from higher valuations, they have to hold a special hearing and a public vote to raise the rates back up.

This is similar to HSB 165, a bill in the Iowa House that would:

  • Set a reasonable limit for revenue growth of cities and counties
  • Allow an override of that limit by local governments after a transparent process of notifications, public hearings, and vote by elected officials
  • Permit citizens to call for a vote of the people if they disagree with the budget passed by their local government

A recent Des Moines Register/Mediacom Iowa Poll shows most Iowans think property taxes are too high; an opinion shared by most demographic groups, as well as Democrats, Independents, and Republicans. This confirms a statewide public opinion survey ITR conducted in January.

Legislators in both chambers and the Governor have indicated property tax reform is a priority this year. If Nebraska can do it, so can Iowa!

Where Does Iowa Rank?

If you were to fill out a tournament bracket based on each state’s taxes, few people would pick the State of Iowa to advance past the first round.

According to the Tax Foundation, Iowa has the sixth worst state business tax climate and the ninth highest individual income tax rate.

High tax rates deter economic growth and productivity. High tax rates also provide a competitive disadvantage as states race to attract and retain residents and businesses. Individuals, entrepreneurs, and businesses will vote with their feet by moving to states with the best regulatory and tax climates.

The Tax Foundation article cites the National Movers Study comparing the number of inbound and outbound moves for each state. Again, Iowa’s ranking is near the bottom at 42 out of 50.

While last year’s tax reform is a good start, Iowa’s tax rates remain some of the highest in the nation. Iowans need to feel confident they can succeed with hard work and ingenuity. Creating a better tax climate will impact Iowa for generations.

Issue Updates

Property Tax Reform
HSB 165 
status: Passed by House Ways and Means Subcommittee

If you are not familiar with this property tax reform bill, the ITR Watchdog has not been barking loudly enough! The best way to provide long-term property tax relief is to control the growth of government at the local level and establish a strong truth in taxation measure. READ MORE

Spending Limitation Amendment
SJR 20 
status: Placed on Senate Appropriations calendar

This resolution amends the Iowa Constitution to require that the state only spend 99 percent of the revenue received each year. Senator Charles Schneider said about the amendment, “I believe it is important to Iowa’s fiscal health. If adopted, the amendment ensures Iowa spends fewer tax dollars than it takes in, while maintaining the flexibility that state government needs to respond to emergencies like natural disasters, floods, animal disease outbreaks, or a farm crisis.” READ MORE

Super-Majority for Tax Increase Amendment
SJR 16 
status: Passed by Senate Ways and Means Subcommittee

If lawmakers decide that more money is needed from the incomes of families and businesses across the state, it is a decision that should not be taken lightly. Requiring a two-thirds majority vote by the legislature to raise income taxes is a commonsense protection that puts taxpayers before the noisy special interests that are constantly asking for a bigger piece of their paychecks.

Elimination of the Inheritance Tax
SF 307 
status: Placed on Senate Ways and Means calendar
HF 438 status: Referred to House Ways and Means Committee

These bills would completely eliminate the inheritance tax. The inheritance tax in Iowa can require up to a 15% tax on asset transfer if the recipient of a given asset is not a lineal relation of the benefactor. If a deceased person does not have children or chooses to leave their assets to a non-lineal relation, this can create a scenario where the beneficiary does not have the liquid assets to pay the inheritance tax. This could potentially result in the sale of a small business or family farm. This is not the outcome tax policy should strive to achieve.

Federal Funds Inventory
HSB 205 status: Assigned to a House Appropriations Subcommittee

The State of Iowa received $8.5 billion from the federal government in 2017, an amount that eclipses our current state budget of $7.5 billion. Roughly half of the money flowing through Iowa isn’t even funded with state income or sales tax; it’s funded with federal money that often comes with strings attached. The bill would require identifying a potential or foreseeable end date for each federal grant. This would allow our state to understand and plan for the time when each set of federal dollars may no longer be coming to Iowa. READ MORE

Taxpayer Funded Lobbyists
SF 573 status: Passed by Senate State Government Committee

Taxpayer dollars should not be used for lobbying, and the Iowa Legislature should promptly prohibit lobbying and ballot-issue activity by any organization that receives taxpayer dollars. While it is argued that lobbying is a form of free speech protected by the First Amendment of the Constitution, those rights are for citizens and not government itself.

Occupational Licensing
HF 666
 status: Passed by House Labor Committee

This bill helps ensure occupational licensing isn’t excessive or overly burdensome. Removing those barriers can lead to job creation, more entrepreneurial opportunities, reduced prices, and increased incomes.

Stopping Medicaid Abuse
SF 334
 status: Passed by Senate Labor and Business Relations Committee

This bill provides additional oversight of Medicaid and other public assistance programs. It is important that regular audits are conducted to ensure benefits are applied only to those who truly need the services and ensure taxpayer dollars are not being abused. 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. READ MORE

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