HF 718: Delivering Relief by Curbing Government Spending
This proposal provides property tax relief for landowners by curbing the budget growth of local governments without discouraging economic development. This is accomplished by lowering the growth rate used to determine spending and by consolidating, capping and recalculating certain levies. Those numbers will be lowered, delivering tax relief each year, using the formula below.
The bill lays the groundwork for how to responsibly deliver even bolder reform in the future. The growth rate reductions outlined below sunset after four years, which allows two rounds of assessments for the legislature to analyze the effects and then require legislators to act further.
For General Basic County Levy ($3.50)/Rural Basic County Levy ($3.95):
· If a county’s taxable valuation grows by 6% or more -> growth rate is reduced by 3% and the levy is recalculated
· If a county’s taxable valuation grows by 3 to 5.99% -> growth rate is reduced by 2% and the levy is recalculated
· If a county’s taxable valuation grows by less than 3% -> no recalculation
· Levies not impacted: Pioneer cemetery, debt service, EMS, LE, flood and erosion, natural disaster
For General Basic City Levy ($8.10):
· The cities follow the same growth rate reduction formula outlined above for counties.
· Consolidate 15 special levies into one new capped rate
· Levies not impacted: Municipal transit, aviation authority, insurance premiums, local emergency management, EMS, liability, debt service, IPERS, LE, police/fire retirement, agritcultural land
Providing More Direct Relief for Iowa Seniors and Veterans
This bill provides direct and immediate tax relief for seniors and military veterans. For all Iowans 65 and older, it creates a new exemption on top of existing tax credits. This exemption will amount to $3,250 for 2024 and $6,500 for 2025. It turns the current property tax credit for military veterans, which amounts to $1852, and transforms it into a larger credit to provide additional relief for Iowa veterans. This new Military Service Property Tax Exemption will total $4,000.
This legislation requires tax bills to look more like an itemized receipt, showing where your money is going. Certain levies outside of the new consolidated capped rate can be increased if approved by the voters or voted upon by elected officials. This will increase transparency in levy increases. All elections for bonding must take place in November and require more notice to voters to ensure more Iowans are able to make their voices heard on if it is a good use of their money.
While this may make it more difficult to local entities to pass bonds, the bill also increases the threshold for all bond amounts that must go to the voters by 30%. This threshold has not been adjusted for inflation in 30 years.
HF 718 proposes a fundamental change to the way Iowa handles property taxes- we see this as a great step in the right direction. The bill is now headed to the Governor's desk, after being passed by the House, amended and passed by the Senate, and passed by the House again.