Iowa Lawmakers want more transparency with property taxes, drawing complaints from cities

NORTH LIBERTY, Iowa (KCRG) - A bill requiring more transparency when local governments raise your property taxes is drawing complaints from cities.

Lawmakers say the taxes are increasing partly because rising property values essentially let cities, counties, and school districts can secretly raise taxes, and some believe House File 773 will keep municipalities from that practice.

In the last five years, property taxes in Iowa have risen by nearly 20-percent. The rate of inflation in that time is less than four percent.

The bill, now in the Iowa House, would require city councils, county supervisors and school districts to vote if what you pay in property taxes goes up by more than two percent.

But that stance has been strongly opposed by many city leaders, including those in Dubuque and North Liberty, arguing this will make their budget processes more difficult.

"It is a fairly simple bill that puts transparency back into local government," said Rep. Lee Hein, a Republican who represents Jones County.

Hein says House File 773 addresses a popular topic among taxpayers statewide.

"The constant rise of property taxes needed to be addressed," Rep. Hein said. "This is a way to do it."

For many local governments like in Dubuque, they called it an "unnecessary attack." In a letter to area lawmakers, City Manager Mike Van Milligen wrote: "there are already systems in place for residents to dispute budgets and promote government transparency."

"The complexity of the property tax system will certainly lead to unintended consequences if additional property tax reform is adopted," Van Milligen concluded.

That opinion seems popular, shared by North Liberty Mayor Terry Donahue. He said a potential cap could restrict local governments in the future.

"It's not going to capture some major things that we have to address ourselves too," Mayor Donahue said.

"It just seems like with this past election, that became a big story for our legislators and they thought they needed to do something about it," Mayor Donahue said.

Rep. Hein argues this will make things clearer when people receive their bills, but Mayor Donahue said those measures are already in place for people.

"They will tell the property tax payer that we haven't changed your levee, but whenever the property tax bill comes, there is an increase in your property taxes," Rep. Hein said.

"We have our pre-meetings before they go through departments, we have a meeting to talk to the department heads, we have the initial draft of the budget, we review it- it's all in public," Mayor Donahue said.

While some are enthusiastic about the potential changes, others are clearly concerned.

"I am seeing a lot of support from the taxpayers," Rep. Hein said.

"I think this is a disaster waiting to happen," Mayor Donahue said.

The bill passed the Ways and Means Committee on April 11 in a 54-44 vote. The bill now moves to the entire Iowa House.