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Property Tax

We Were Warned

posted on April 5, 2019

Increased Assessments Don't Have to Lead to Larger Tax Bills

Many Iowans were warned assessments would significantly increase this year, but it was still shocking to open the envelope that delivered a new assessed value to property owners recently.

Naturally, property owners are concerned about the punch this will pack in their property tax bill.

Increased Assessments Don't Have to Lead to Larger Tax Bills

According to the Cedar Rapids Gazette, local assessors aim to keep assessments between 95 percent and 105 percent of a parcel’s value. This is good, assessors should try to be as accurate as possible and there is an appeal process for property owners who think their assessment is not reasonable. However, valuation is only one part of the property tax formula.

Local elected officials have more control over property tax bills than assessors.

The property tax rate is determined when local budgets are created. City council members and county supervisors have the power to reduce the impact of large assessment increases by lowering the tax rate and scaling back the growth of tax bills.

But when local officials don’t adjust their rates in the face of increasing assessments, property tax increases effectively stay on autopilot.  Local governments are being disingenuous by saying that they didn’t raise taxes simply because their rates remained unchanged.  In fact, when assessments go up, taking no action on the tax rates gives property owners a tax increase.

One of our members recently said, “Just because my house is worth more doesn’t mean I have more dollars in my pocket to pay taxes.”

So, what can be done?

Some states have assessment limits. This can distort property tax bills, with seemingly identical properties having drastically different property tax bills. This shifts the tax burden to others and discourages home sales.

A better idea is to implement a system that imposes more transparency and accountability to the local government budget process.

This year, the Iowa House has moved in that direction with their property tax reform bill, HSB 165.  This bill is more of a transparency trigger than a cap or limit. HSB 165 requires a local government to publish a notice of their intent if the budget they propose would increase property tax bills by more than 2%, followed by a public hearing where citizens can weigh-in on the proposed budget, and then an affirmative vote by the council members or supervisors.

A city councilman recently commented on Facebook that this bill would have a “crippling effect” on city budgets. Wrong. It simply requires local officials to vote to increase their budget more than two percent from the previous year.

If property tax growth in excess of two percent is justified and explained to local citizens, they likely would be supportive of their council or board of supervisors moving forward with a budget at the higher funding level.

The Iowa House proposal is 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.

For many Iowans, a property tax bill is nothing short of crushing. Legislators must act, and they need to hear from you, their constituents.

New York. We’ve heard if you can make it there, you can make it anywhere. But, does that apply to tax policy?

As TEF Iowa noted in a recent article, not many people consider New York a taxpayer friendly-state. The Empire State’s high tax rates have received national attention as they have forced an exodus of people leaving New York in search of lower-tax states. Although New Yorkers continue to struggle under the weight of that state’s tax burden, they did receive a recent victory when their legislature made property tax caps permanent.

In 2011, the New York Legislature enacted a temporary property tax cap which limited the growth of local government budgets to two percent or the rate of inflation, whichever was less. This cap also contained an override mechanism: local school districts could exceed the cap if at least 60 percent of voters approved,and counties and cities could override the cap by a 60 percent vote of the governing body.

This is good news for taxpayers in the Empire State. It is time for policymakers in Iowa to deliver a similar victory to Iowans who are suffering from burdensome property taxes.

This Watchdog isn’t the only one barking about property taxes: 
Senator Zach Nunn’s Facebook post:

‘Tis the season for property assessments, and I’ve already heard area residents say theirs went up 10, 20, or even 30 percent! What do you think: Do Iowans deserve truth in taxation and property tax relief?

Cities and counties are passing new budgets and many cities passed “local option sales taxes” with a promise of property tax relief.

Smart Tax reform starts with giving the public the right to be heard before a tax increases and vote when municipalities increase their budget.

Iowans for Tax Relief

If your assessment is unfair, learn how to appeal here: https://paab.iowa.gov/appealing-your-assessment

 

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Newspaper articles:

Most Iowa property assessments increase in 2019 – CR Gazette

It’s official: Polk County home values have gone up at least 10 percent. Here’s how you can protest. – DM Register

Iowa City assessor records sharp rise in property value – IC Press Citizen

Assessment notices now sent to all with valuation change – Toledo Chronicle, Tama News-Herald

Property Values Up in Polk County, Here’s What Homeowners Should Know – WHO TV

Issue Updates

Issue Updates:

Occupational Licensing
HF 752
 status:   Approved by full House 54-44; sent to Senate 

This bill helps ensure occupational licensing isn’t excessive or overly burdensome. Reducing these barriers can lead to job creation, more entrepreneurial opportunities, lower prices, and increased incomes.
READ MORE

Stopping Medicaid Abuse
SF 334
 status:   Approved by full Senate 30-18; sent to House

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 in order to safeguard taxpayer dollars. 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
Whistleblower Protections
SF 502 status:  Approved by full Senate 49-0 on March 26; Passed House State Government Committee

Strong whistleblower protections are necessary to defend taxpayer dollars. This bill extends Iowa’s current whistleblower protections to public sector employees who report suspected wrongdoing to their human resources director and mandates training for new public employees on the procedure for reporting. Fear from the repercussions of reporting wrongful expenditures of public dollars can lead to silence, which may result in the ongoing misuse of your tax dollars. Public employees acting in your best interest deserve to be protected for bringing corruption to light.

No Change From Last Week:

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

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 proposes an amendment to 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 result in the sale of a small business or family farm. This is not the outcome tax policy should strive to achieve.
READ MORE

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: Introduced, placed on calendar

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.

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