Is This the Year Property Tax Reform Makes it Through Statehouse?

By Dave Franzman, Reporter

Representatives listen to closing remarks in the Iowa House during the final day of the Iowa legislative session, Tuesday, March 30, 2010, at the Statehouse in Des Moines, Iowa. (AP Photo/Charlie Neibergall)

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By Dave Franzman

CEDAR RAPIDS, Iowa - A plan to cut the commercial and industrial property tax rates in Iowa didn’t get out of the statehouse last year. But with a state budget surplus in excess of $800-million dollars, many lawmakers and business owners alike believe this may be the year.

Tuesday, Iowa Governor Terry Branstad made property tax reform one of his top three Condition of the State speech goals. On Friday, he reemphasized that idea with a “tweet” message to followers that said “Iowa’s unemployment rate is fourth lowest in the country, but we need property tax relief to reach our full potential.”

While commercial and industrial property tax relief might not rate high on the wish list of average Iowa voters, it does resonate with the business crowd. And that was obvious Friday when the Cedar Rapids Economic Alliance hosted the first Legislative Forum of the new session with area lawmakers. In front of a mostly-business crowd, both the first question and many following questions involved the status of the commercial tax relief issue.

One attendee was John Wasta, who with several partners, owns Tallgrass Business Resources—an office design and furniture supply business. Wasta and partners have locations in four Iowa cities with a total of 47 employees. He said wages and health care costs have the biggest impact on his business budget. But in recent years, he’s seen the growing impact of rising property taxes on the buildings he owns.

“Property taxes is something that’s been talked about for a long time—especially commercial property taxes and it’s time to address it,” Wasta said.

Wasta said most business property owners have a real problem with how taxable value is determined. Business owners get taxed at 100 percent of value. Residents, by contrast, pay taxes on just over half the value of a personal home.

At the Legislative Forum, several lawmakers weighed in on the tax issue. Representative Tyler Olson (D-Cedar Rapids) told the business group he is somewhat surprised to be dealing with the tax reform issue again this year.

“I thought we were going to get there last year. We didn’t. But I think we can get there this year,” Olson said.

Newcomer Representative Daniel Lundby (D-Marion) said he is in the process of setting up a home business. And that gave him an eye-opening look at the property tax issue.

“I was rather concerned to find out how high the state of Iowa was when it comes to property taxes,” Lundby said.

Governor Branstad has proposed cutting commercial and industrial property tax values by 20 percent over four years. But lawmakers at the forum said if you spend too much on that problem, then there’s less available to address other issues like the funding of mental health programs or education.

Business owner Wasta said he actually agrees action on those two issues will probably have to come before any significant work on property tax reform.

And while there is general agreement that cutting commercial and industrial property tax rates is an issue getting a lot of attention now, no one is willing to bet yet that attention will translate into legislative action by the end of the session.

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