Legislature Passes Property Tax Reform, Some Democrats Fear Impact to IPERS

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DES MOINES, Iowa –Under the new tax reform bill, when homeowners get their new property value assessments all of their city’s levies are adjusted so the city brings in the same amount of revenue as it did the previous year. However, the city can choose to seek more revenue. A public hearing and a simple majority vote can allow a city council to grow revenue up to two percent through levies. If the city wants to increase their property tax revenue by more than two percent, they need a two-thirds majority vote.

Republicans say the bill is all about transparency and allowing taxpayers a better look at the process cities use to collect property taxes.

“Basically, what it does is it says we’re going to take the new assessments, apply them to the old expenditures, here’s your new rate. If the city or county wants to go above that they certainly can, but they have to take a vote to do it,” said Republican Representative Dustin Hite.

“This will give the residents the opportunity to know that and then that gives them the opportunity to show up at public hearings and voice their complaints or voice their approval if that’s where they’re at” he said.

Democratic Representative Chris Hall says that needing a super majority could get in the way of projects needed to make communities better.

“If you’re an urban community that is also trying to provide attractive public services like arts, nightlife, public services, even good roads, to try to make sure your community is attractive for people who want to move there,” he said.

Hall argued that making harder to raise revenue could create budget battles between pensions like IPERS and things like road projects. Hite says that’s impossible.

“IPERS is mandatory, the rate at which cities and counties contribute to IPERS is mandatory. None of that changed here,” he said.

Hall also had concerns that the bill would have an indirect effect on IPERS. He argues that if it’s harder for a city to raise revenue they could choose not to hire open firefighter or police officer positions, which in turn would limit the amount of employees paying into the program.

“In the long run it has the potential to end up really degrading the solvency of our public pensions,” said Hall.

IPERS itself weighed in on this releasing a statement saying:

This bill does not alter the employers’ obligation to pay the employer portion of IPERS’ contributions as established annually…This bill does not affect a member’s or retiree’s pension.

If signed by the governor this would impact budgets in fiscal year ‘21 and beyond.

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