New property tax law could be problematic for counties, cities

     Late last week, Governor Kim Reynolds signed the Iowa Legislature's property tax bill into law, after both the Iowa House and Senate passed their versions of the bill.

   During the May 2 Jones County Supervisor meeting, Auditor Whitney Hein brought the bill to the board's attention. (This bill was referred to as House File 718. The supervisors' discussion took place prior to the governor signing the bill into law.)

   "I think it's better than some legislation we've seen proposed this session," Hein said. "But I am still not in favor of it. It would basically limit our growth; there would be a growth limitation factor on taxable valuations as a whole county."

   Hein said the county could be limited to 2 or 3 percent growth when it comes to the General Fund levy.

   "But what I don't know is, if we are not at our maximum, are we allowed to go to our maximum?" she asked of the complicated law.

   For instance, for the county's Rural Services levy, the maximum is $3.95. At this time, the county is not at that maximum, though.

   "I feel like it's going to end up being problematic," continued Hein.

   For instance, the county uses some Rural Services funding to cover sheriff's deputy wages and benefits. They can do this while still staying under the maximum levy rate, and it helps offset spending of the General Services fund. Hein said if the county doesn't have to use the growth limitation in future years and they're not at their maximum in Rural Services, they could shift even more deputy expenses to Rural Services.

   "The only unfortunate thing that would do," she added, "it'd be more of a tax burden on the rural people, which hasn't necessarily been the philosophy of this board in the past."

   Having tried to read the bill (HF 718), Hein said she reached out to ISAC for clarification. She urged the supervisors to do the same.

   "It's very cumbersome to read," she said. "We're going to be looking at the county as a whole with valuation and you'll use your increase in valuation to back your levy rate. So it'll be less focused on where we're actually setting our levy rate. Our levy rate will be based on this calculation of what we're allowed for our taxable valuation growth. It's going to change how we think about funding."

   "What I feel they're trying to do is limit the taxes on our new valuation," commented Supervisor Joe Oswald.

   "It is a growth limitation," Hein said, plain and simple.

   "Are they trying to limit growth to 3 percent?" asked Supervisor Ned Rohwedder.

   "There are some instances where you'd be limited to 2 percent growth," offered Hein. This includes other taxable entities as well (cities and schools)."

   "A 3 percent growth limitation on Jones County is far different than a 3 percent limitation in Linn and Johnson County," Supervisor Jon Zirkelbach said in comparing the population of the counties. "And our costs have gone up the same as those other counties. Yet, we're hamstrung."

   "I think we'll eventually have to cut services," Rohwedder said. "We'll be forced to."

   Hein agreed.

   "There are some caveats in there (the bill) that if there's a new state requirement, that we have a little bit of an out to increase our levy rate for one to three years," explained Hein of unfunded state mandates. "But after that, we wouldn't be able to increase our levy rate anymore.

   "I think it'll be very confusing for the Department of Management to review and certify budgets because every single county is going to have a different requirement for allowable levy rates."