House Republicans voted to pass a bill they say will lower Iowans’ property taxes next year, even as vast differences remain with the Senate’s approach that keep a final deal out of reach.
The House passed Senate File 2472 on Wednesday, April 22, with changes that advance a revised version of House Republicans’ plan. The vote fell largely along party lines, a contrast from the broad bipartisan support for the Senate’s original proposal.
The measure does not represent a final agreement between the chambers, though Iowa’s legislative session is in overtime after the 100th day came and went this week.
The House’s 64-23 vote sends the bill back to the Senate. Democratic Reps. Sean Bagniewski of Des Moines, Dan Gosa of Davenport and Kenan Judge of Waukee broke from their party to support the bill.
Senate lawmakers voted 41-4 on April 8 to pass their version, seeking to advance what Senate leaders consider a more “ambitious” reboot of Iowa’s property tax system.
Rep. Carter Nordman, R-Dallas Center, who chairs the tax-writing House Ways and Means Committee, said Iowa’s property tax system has prioritized certainty for government budgets over family budgets.
He estimated House Republicans’ plan would amount to a $435 million property tax cut next year and $4 billion in relief over six years.
“This proposal in front of us today restores some accountability and focuses on real, tangible relief for all Iowans,” Nordman said. “We don’t pick winners and losers. We don’t shift one person’s tax burden to another. We deliver real relief for Iowans.”
It’s unclear after the House vote whether Senate lawmakers are willing to bend to the House’s proposed compromise, which leaves out several key Senate priorities.
“Property tax reform is not a buffet of items you get to pick and choose from,” Sen. Dan Dawson, R-Council Bluffs, who chairs the Senate Ways and Means Committee, said in a statement.
“… We have been clear on our position,” he added. “And we continue to maintain that a conversation on the type of property tax relief Iowans want includes diversifying revenue streams, simplifying the system, and bringing the substantial relief Iowa homeowners need.”
Democrats accused House Republicans of pushing a bill that is a “shell game” that shuffles money from one local fund to another without lowering taxes.
“I want this chamber to produce a good property tax bill and I want us to put more money back into the pockets of everyday Iowans, but the bill before us will not reduce property taxes,” said Rep. Aime Wichtendahl, D-Hiawatha, who previously served on the Hiawatha City Council. “And we know today that this bill is not the final product.”
Differences in approach remain between House, Senate plans
The House kept its strict 2% revenue growth cap for local governments and does not allow greater growth if inflation is higher, as the Senate’s bill did.
The House also does not align with the Senate’s proposal to overhaul the system by getting rid of the decades-old rollback mechanism. That limits a home’s taxable value and replaces it with a 50% tax exemption on Iowans’ primary homes, up to $350,000.
House Republicans left out a Senate measure that would index the state’s gas tax to inflation. Critics say lawmakers should not approve an automatic gas tax increase while the U.S. war with Iran has driven up oil prices.
Nor did the House include a Senate provision that would increase taxes on multi-residential properties in Iowa, which housing developers warned would be passed onto tenants as rent hikes during a public hearing Tuesday.
The Senate measure would create a new tax class for apartments, nursing homes and assisted-living facilities. It would reverse a 2013 measure that some critical lawmakers, including Dawson, have said failed to deliver lower rents as promised.
Nordman told reporters “we’ll continue to talk about all those things.” He said provisions such as the gas tax should not be part of property tax talks.
Senate Majority Leader Mike Klimesh, R-Spillville, said his caucus released its property tax proposal on the first day of session to have “real conversations about what reform looks like and work with our colleagues on getting a bill across the finish line.”
“Now that a version has passed the Iowa House, I am optimistic we can work on a compromise that includes aspects of all our plans, helps address the fact that Iowa is the one of the worst states for property tax burdens and provides relief to the Iowans desperately asking for it,” Klimesh said in a statement.
Although negotiations continue, Nordman told reporters after the vote that he remained confident a bill would hit Gov. Kim Reynolds’ desk this year.
“It’s a legislative session,” Nordman said. “It’s messy. It’s supposed to be hard to get difficult bills across the finish line.”
What else is in the House property tax bill?
The measure House lawmakers advanced would:
Nordman said these measures put in place guardrails that would limit property tax spikes.
“It is going to take buy-in from the local governments to make sure that happens as well,” he said.
Rep. Adam Zabner, D-Iowa City, said previous bills promising to lower property taxes were ineffective and cities would likely respond to this proposal by increasing other fees, which he warned could spike costs such as utility bills.
“It’s just more politics,” Zabner said. “Iowans are facing serious challenges of affordability. Iowans are facing an economy that’s struggling. They want real solutions. They don’t want another postcard that says something that won’t come true.”
House Democrats pitched alternative plan
House Democrats proposed a failed amendment with their own plan, which they said targets relief to Iowa homeowners by using available state resources to lower property tax burdens, without shifting costs to cities, counties or schools or cutting funds from essential public services.
Their plan included a cap on property tax increases at 4% a year, a freeze on the property taxes Iowans 65 and older pay on their homes as well as a $1,000 rebate to homeowners and a $500 rebate to renters.
They also wanted to triple the Homestead Tax Credit and have the state cover local police, fire and EMS retirement matches.
Rep. Larry McBurney, D-Urbandale, who previously served on the Urbandale City Council, said the House GOP plan does not address dramatically rising assessments and would therefore fail to deliver property tax cuts.
“This is going to result in communities all across the state being put into a position of how do we provide the types of services that residents expect from us, and right now we don’t have an answer for them,” McBurney said.
Marissa Payne covers the Iowa Statehouse and politics for the Register. Reach her by email at mjpayne@registermedia.com. Follow her on X at @marissajpayne.
This article originally appeared on Des Moines Register: Iowa House volleys property tax bill to Senate with no deal in sight
Reporting by Marissa Payne, Des Moines Register / Des Moines Register
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