Iowa’s local governments were ready to sound off when the Iowa Legislature passed Senate File 2472, which will place strict limits on the amount of property tax they can collect each year.
Administrators and elected officials fretted publicly about maintaining adequate public services. They questioned how they can still encourage growth after a separate part of the bill overhauled one of their primary development tools.
Des Moines immediately made the potential consequences more concrete: City and library officials are talking about the library network getting a budget cut in about a year. One figure floated was 4% of the system’s budget, about half a million dollars.
Every Iowan should expect to hear these sorts of discussions ― over and over and over ― for years to come. This is the reality of local budgets. Des Moines is like most cities: Over half of its general fund budget is devoted to police and fire protection. Revenue from sources other than property taxes is responsible for a lot of other big spending categories, such as road maintenance. If unavoidable expenses such insurance rate increases go up faster than tax revenue, governments have to cut back elsewhere.
This is what restrictions on property taxes look like
Starting July 1, 2027, the property tax bill will spit out a budget cap to cities and counties of a 2% year-over-year increase after accounting for new property valuation and some other exceptions. If inflation is at or above 2%, it’s fair to expect most or all of the new tax money to be swallowed up immediately each year. So cities and counties will then work around the edges ― maybe library and park spending will seem most expendable ― or rethink how they set up police and fire departments. Or both.
That might be exactly what Iowans want, to be fair.
And legislators should be commended for focusing on the issue and coming up with solutions that passed with significant bipartisan support, a rarity in this partisan age.
Legislators took up property tax reform because collections have soared well in excess of inflation, as tax-relief groups have documented. Iowans’ frustration with those bills is well established, too.
Local governments might not yet have squeezed out every bit of excess from their budgets. During two years of debate that led to Senate File 2472, one of its architects, Sen. Dan Dawson, R-Council Bluffs, frequently observed that cities and counties large and small had enough discretionary funds to flood the Statehouse with lobbyists who cried poverty while arguing against the revenue cap. Point taken ― cities and counties may well develop efficiencies that let them maintain services at lower cost, or decide that there truly are a few things that everybody can do without.
But the belt-tightening the bill demands is so unforgiving that the trade-offs are going to be apparent, and quickly.
“I think it comes up short on the city’s ability to take care of its people,” Bondurant Mayor Doug Elrod told the Business Record. “I think we’re going to struggle.”
Up next: Lots of lots of talks about service reductions
Des Moines leaders are going to grapple with consequences on May 18 at a 7:30 a.m. work session in City Hall. Melissa McCollum, the director of the library network, will give a presentation to the City Council, and City Manager Scott Sanders is expected to give some early indication of how his staff will construct an overall budget for the first year the property tax bill is in effect.
State lawmakers did acknowledge some unique concerns when constructing the bill. Transit operators will have a 3% cap on revenue growth, instead of 2%. And a task force set up in the bill must present a report before the 2027 legislative session about how Polk County could get some money from non-government tax-exempt parcels, or payment in lieu of taxes. Polk County houses a disproportionate number of such nonprofit entities. A few organizations do make voluntary contributions, but others that used to, including large downtown Des Moines hospitals, have stopped.
Such efforts might mitigate the difficulty confronting local elected officials, but they won’t come close to eliminating it.
It’s a short distance from arresting the growth in residents’ property tax burden to taking up such questions as “which days should we close a library?” or “do we really need to keep this swimming pool?” Iowans should know the reason they have to come up with the answers.
Lucas Grundmeier, on behalf of the Register’s editorial board
This editorial is the opinion of the Des Moines Register’s editorial board: Rachel Stassen-Berger, executive editor; Lucas Grundmeier, opinion editor; and Richard Doak and Rox Laird, editorial board members.
This article originally appeared on Des Moines Register: Property tax dominos won’t stop at Des Moines library fears | Opinion
Reporting by The Register’s editorial, Des Moines Register / Des Moines Register
USA TODAY Network via Reuters Connect
