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'The Watchdog'

What Does Transparency Look Like?

posted on March 29, 2019

What Does Transparency Look Like?

Many Iowans received their new assessment notices in the mail recently.  And many of those same Iowans have also read about their cities and counties passing a new budget for the upcoming fiscal year. But what does it all mean to a taxpayer’s bottom line?

As ITR President Chris Ingstad testified earlier this month in support of property tax reform introduced in the Iowa House of Representatives, “We need to get beyond the issue of rate or assessment and ask the real question: how much are property tax bills going up?”

Iowa provides its citizens with copious amounts of budget and tax information from city and county governments.  In fact, there is so much information available on the State of Iowa’s Data Portal and from the Iowa Department of Management, it can be overwhelming. But that data isn’t always useful to the taxpayer.  It seemingly still doesn’t give the taxpayer information they can actually digest.

For most taxpayers, looking at a budget report would be like being dropped into a college math class. They could figure out the answer, but it would be a long and painful process.

But there is a solution.  There’s a way to ensure that citizens can easily understand what the budgets passed by their local governments will mean to them.  Utah has simplified the process and has one of the most transparent and taxpayer-friendly property tax systems in the country.

The first thing Utah’s property tax system does is prevent the automatic property tax increase when assessments go up.  Utah’s law requires that when property values rise, property tax rates must fall until additional public hearings are held. This stops local governments from receiving an automatic budget increase just because property values increased.

When a taxing entity (city, county, school district) in Utah proposes to increase its property tax revenues above what was budgeted the previous year, their “Truth in Taxation” law mandates that a public notice be issued and public hearings held. Utah’s public notice system requires each local government to state very plainly how their proposed budget will impact a specific property tax bill in their given community.  The “Truth in Taxation” hearing process then allows taxing authorities to make their case to the taxpayers to justify the proposed increase and allows citizens to comment on the proposal.

Utah’s system ensures that an open conversation occurs between local governments and local citizens; Iowans would benefit from a similar system.  As legislators are debating property tax reform, encourage them to make Iowa’s property tax system truly transparent.

How Do Iowa's Property Taxes Compare?

Not great, that’s how. Iowans pay the 11th-highest effective property tax rates in the country.

The table below from the Tax Foundation compares the mean effective property tax rates on owner-occupied housing (total real taxes paid/total home value) for all 50 states. The data does not include property taxes paid by businesses, renters, and others.

Take a look at Utah: they rank 43rd with the eighth-lowest effective property tax rate. Utah’s property taxes are not low solely because of their “Truth in Taxation” process, but their system of transparency definitely plays a role in keeping rates in check.

Occupational Licensing Reform: It’s Time To Cut Iowa’s Red Tape Tax

Occupational licensing exists under the guise of protecting consumer health and safety, but often, it serves instead as an excessive or unnecessary barrier to entry into the workforce.

report from the Institute for Justice on job licensing found that Iowa’s job licensing requirements are the 37th-most burdensome in the country. In the report, the Institute for Justice analyzed 102 lower-income occupations and found that Iowa requires licenses for 71 of those occupations. This red tape tax is a regressive barrier to entry that hurts both workers and consumers.

Rep. Dave Deyoe (R-Nevada) has championed job licensing reform this legislative session. His bill, HF 752, would require a full evaluation of all of Iowa’s occupational licenses every six years. This legislation passed out of the House Labor Committee with bipartisan support and is scheduled to be debated by the full Iowa House on Monday.

Other legislators are taking notice of this legislation, including Rep. Megan Jones (R-Spencer) who authored a guest column on occupational licensing that appeared in the Spencer Daily Reporter last Sunday.

Issue Updates

Issue Updates:

Whistleblower Protections
SF 502 status: Subcommittee scheduled for Monday, April 1

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.

Occupational Licensing
HF 752
 status: Introduced, placed on House Ways and Means calendar (formerly HF 666)

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.

Stopping Medicaid Abuse
SF 334
 status: Taken up for consideration and later deferred.See Bill History

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

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.

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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