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Home Hot Topic New Property Tax Law Squeezing Municipal Budgets in Certain Cities

New Property Tax Law Squeezing Municipal Budgets in Certain Cities

by Cecilia

In a period of soaring property values, cities find themselves grappling with budget constraints caused by a recent state law change. This situation has compelled them to make budgetary reductions.

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The new law, backed by strong bipartisan support from both Republicans and Democrats, aimed to alleviate the property tax burden on Iowans, who were deemed to be paying excessively.

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For example, in the city of West Branch, where $60,000 of the annual Hoover’s Hometown Days was traditionally funded by the city, officials have had to discontinue this support. Jessi Simon, Main Street Executive Director, expressed concern about the impact on community traditions, emphasizing the need for volunteer efforts and the formation of a nonprofit to sustain such events.

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City Administrator Adam Kofoed indicated that these cuts were just the beginning, driven by the need to save money following the passage of the property tax reform law. While this law is estimated to save $100 million statewide, West Branch alone suffered a loss of $400,000, affecting areas such as road maintenance, economic development initiatives, and public safety.

Kofoed explained that the budget reduction would translate to approximately $40,000 annually that the city would need to cut from its police and fire departments. The city council has explored various cost-saving measures, including turning off streetlights at night, reducing services provided through parks, recreation, and the library, considering hikes in water and sewer rates, and even contemplating the elimination of the city administrator role.

Kofoed expressed frustration, stating, “I don’t think the legislation was thought through thoroughly” and noted that attempts to reach out to representatives had gone unanswered.

Iowa Republican Senator Dan Dawson defended the legislation, emphasizing the need to control property tax increases. He cited data showing a significant rise in property tax collections compared to income growth in Iowa. The legislation, HF 718, aimed to control property tax growth by implementing common-sense reforms and redirecting savings to taxpayers through lower rates. Senator Dawson also acknowledged that some local governments resisted these changes but argued that the legislation responded to the demands of Iowans to address escalating property taxes statewide.

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