An issue popped up this week in the Iowa Legislature that will impact every property taxpayer and property taxing authority. A mistake in calculating the rollback on multifamily residential properties led to a 1.8% increase on valuations on residential property. This could lead to a statewide property tax increase of $120 million over what should be collected. There is a bill that passed the Senate this week to correct this rollback error. Seems like an easy answer, right?
The controversy lies in the calendar and how far local taxing authorities are in building and certifying their budgets. Local governments such as cities and counties started working on their budgets months ago as property valuation data was updated. I do not believe they knew about this calculation error and were working in good faith. But there was more of your money available on the spreadsheets than there should be, and local officials plugged the higher number into their budgets.
Now that the error has come to light, the Legislature is moving a bill to restore the correct rollback in the calculations of your property taxes in order to avoid a direct property tax increase on you. This is being met with strong opposition from many property tax collectors. The interesting twist on the debate is that no one is disputing that an error was made. In the Senate subcommittee, testimony against the bill didn’t argue against the new, lower rollback number. All the opponents asked is that the correction be made next year, as not to impact this year’s budgeting process.
Allowing the correction to happen next year would be a $126 million property tax increase statewide on you. Your Republican governor, Senate, and House have been consistent in lowering taxes, and never have we increased taxation on you. Further, if we accept the error, this tax increase will become permanent as it is built into budgets and becomes the base for the following year. That would be unacceptable.
In order to help minimize stress at the county and city level, the final bill will give one year of flexibility to the process of county auditors revising rollback numbers. The bill also extends to April 15 the deadline to finish their budgets. This means local officials may have to cut expenditures to which they have already agreed. This is part of the job, and I wish it happened more often. When the Republican trifecta was created in 2017, we had to de-appropriate hundreds of millions of dollars in two consecutive years. This is because the Senate Democrats had forced budgets that were larger than revenue estimates could sustain. Actions and determination such as this is how we eventually became one of the best managed states in the country.
Regardless, this will be difficult for local officials, and it is not their fault it happened. I would encourage citizens to not blame local officials for the error and actually encourage the boards and councils to look for even more areas that could be cut or programs that could be ended once they have served their purpose. This event could lead to a positive outcome beyond being fair to the taxpayer.
I respect the difficulty counties, cities, and other property tax systems are about to have. But that system serves Iowans, and those Iowans in great number have told us they are already suffering under the weight of property taxes. When we address situations such as this error, the winner should always be the taxpayer.
