Season 2 - Episode 19: Monopoly: Pass Go, Do Not Collect $200

Monopoly: Pass Go, Do Not Collect $200

Property tax reform sounds simple… until you follow the money.

In Episode 19 of Deciding Iowa, we break down what’s actually in Senate Study Bill 3001 and why it may not be the “relief” it’s being framed as.

👉 Lower property taxes…but higher costs somewhere else
👉 Relief for some…potential burden for others
👉 Less local control…more reliance on a shrinking state budget

The big question: Who really pays in the end?

Take a few minutes to understand what’s on the table—and what it could mean for Iowa’s communities, schools, and future.

🎥 Watch now and decide for yourself.

#DecidingIowa #IowaPolitics #PropertyTaxes #FollowTheMoney

Transcript

SPEAKER_01 0:00

Hello, Bramer County and Oliva. I'm Dr. Sean Albert, and I'm a cancer scientist, biochem prof, and House District 57 candidate.

SPEAKER_00 0:07

And I'm Dr. Emily Bavers. I'm a physician, mom of three, and a health advocate.

SPEAKER_01 0:11

A promise by our governor and the state legislature going into this legislative session was to take a look at property tax and try to reduce the property tax burden for the state.

SPEAKER_00 0:21

Yeah. And Senate Study Bill 3001 is the Senate's proposal to do just that. Here's some of what the Senate bill is hoping to accomplish. First, it will replace a complex rollback system with something more transparent and predictable. Second, it means to slow growth in local tax collections. Third, it provides some important property tax relief for seniors in the state of Iowa. And fourth, it raises property taxes on apartments and multifamily dwellings.

SPEAKER_01 0:53

You know, towards transparent and predictable, the bill eliminates the rollback. And this has absolutely nothing to do with Walmart and rollback costs that you might see. This rollback is where each year the state decides what percentage of your home's value is taxable.

SPEAKER_00 1:08

Yeah, and the variability on what that rollback number will be year to year adds confusion as to what the published rates are that you actually get in your mailing every year and what the real dollars you will pay on property tax are. So it's been a headache for individuals as well as in balancing local budgets.

SPEAKER_01 1:27

For example, between 2022 and 2023, the rollback aggressively dropped from 54% of your home being taxable to just 46%. Now, when combined with levy rate caps, that unexpected drop caused budget issues for local governments.

SPEAKER_00 1:44

Leading to things like not being able to pay for swimming pool repairs and not opening pools for the summer.

SPEAKER_01 1:50

Yeah. So without the rollback, the entire value of your home will now be taxable.

SPEAKER_00 1:55

But don't freak out by that right now, because the next step is to replace the rollback with a homestead tax exemption of 50%.

SPEAKER_01 2:05

You know, this means that you and I will not be taxed on the first 50% of our primary residential properties worth up to$350,000.

SPEAKER_00 2:15

Yeah. And so the second part of that whole big property tax reform bill is to try to slow growth in local revenue. And here the Senate means to do this by capping revenue growth at 2%, but they're trying to make it a soft 2%.

SPEAKER_01 2:29

Yeah, the idea of soft 2% means that the growth will be tied into increases to the consumer price index, meaning that 2% growth can be bumped up if inflation hits certain metrics. So this is important for continued funding of services like public safety.

SPEAKER_00 2:45

Yeah. And then third point, tax relief for seniors. Homeowners in Iowa over the age of 60 who have paid off their home entirely will become fully exempt from most property taxes. This full exemption would be phased in over time, though.

SPEAKER_01 3:02

That's you know more aggressive than the governor's proposal to freeze property tax for seniors ages 65 and older in homes valued at$350,000 or less. I I wonder where that will land in the final bill because I just want to remind you this is the Senate's version. We also have the House, and of course Reynolds will be uh have her version and we'll have to come to a single bill.

SPEAKER_00 3:25

Yeah, I wonder where it will land, and I also wonder what the driver is there. But um, you know, another thing in the Senate bill is to raise property tax for owners of apartments and multifamily homes. One reason is that property rates for those dwellings have decreased dramatically due to a 2013 tax bill, but rent has increased over that time by over 30 percent.

SPEAKER_01 3:49

So we need to be concerned that this rate increase will just be passed on to renters who all you know already are struggling with the high rent prices.

SPEAKER_00 3:58

Right. It's regressive in that it probably will impact people who do not own property by raising their prices, but not the property owners. Um so it'll also probably slow investment into affordable housing.

SPEAKER_01 4:13

Yeah. So this bill, this Senate file 3001, uh as it currently exists, would also change school funding. Homeowners will pay less directly to schools through property tax, lowering their property tax burden. At least that's the intent.

SPEAKER_00 4:28

That's the intent. But schools will then rely more on state funding instead of local taxes.

SPEAKER_01 4:34

Emily, with over a billion dollar deficit for now two years in a row, how can the schools rely on the state for that additional funding? Where is that money coming from?

SPEAKER_00 4:45

Presumably the state is the same budget surplus that's dwindling fast from covering all of our revenue deficits.

SPEAKER_01 4:53

Yeah, when that surplus runs out, and it will run out quicker than later, I grow very concerned about having so much local school funding in the hands of legislators in Des Moines. And you know, right now those same folks are mismanaging both our economy and our budget.

SPEAKER_00 5:11

And we've already seen them renegate um backfill promises in the past.

SPEAKER_01 5:15

Yeah. So altogether, um Senate Study Bill 3001 is projected to noticeably decrease property tax revenue in the state.

SPEAKER_00 5:25

Yeah, but then they they have to replace that tax revenue somewhere. So this bill then includes a provision to increase both a gas tax change and also the process for local option sales taxes.

SPEAKER_01 5:38

Yeah, this is an interesting thing to have in this bill. And if you look at this gas tax change, it would be uh based on inflation index and would increase the price that everyone has to pay at the pump, whether you live here in Iowa or just driving through 80 or 35, interstate 35, whether you are flying or shipping or doing business in Iowa.

SPEAKER_00 5:58

Yeah, and that gas tax would automatically increase when inflation is high.

SPEAKER_01 6:03

Whether or not this is a a fair distribution, uh fairer distribution of taxing really just depends on your vantage point, to be honest.

SPEAKER_00 6:11

Yeah. I would say some see this bill as shifting tax burden to lower and middle income Iowans who perhaps don't own property but do use fuel for transportation and pay local option sales taxes.

SPEAKER_01 6:26

Here is the acceleration of regress regressive taxes we all knew was coming in response to flat income tax revenue drops.

SPEAKER_00 6:36

Yeah, um it's inevitable. Senate Study Bill 3001 is just one proposal, though. The House has their own, and of course the governor has her ideas.

SPEAKER_01 6:47

Whatever shaped the final property tax legislation, the most astounding concerns in our minds is the potential loss of local control to levy for budget needs. This is school and local uh governments. And the Iowa legislature won't be able to keep any promises to replace lost uh lost local revenue because they simply lack the money to do so. So this is a mess. At least they very much could be a mess.

SPEAKER_00 7:17

But anyway, be well, Iowa.

SPEAKER_01 7:19

Yeah, be well.