DES MOINES – Iowa Republicans this week are defending a property tax relief bill approved by lawmakers and signed into law in 2013 by former Governor Terry Branstad, saying the bill saved taxpayers money and did not have a detrimental affect on local government tax revenues.
Senate File 295 was the largest property tax cut in the history of Iowa, Iowa Republicans said this week in a newsletter:
It was one of Governor Branstad’s key priorities, took several sessions to pass, and was approved with the votes of Democrats and Republicans alike. The bill was projected to save commercial property taxpayers millions. Part of the bill required the state to reimburse or “backfill” local governments for the revenues they stood to lose because of the reduction. Whether those local governments still need the budget boost is an argument for another day, the backfill was part of the bill, and to date, the state has made those payments.
Recently, it seems local governments are worried that their budget-boosting tool might not be there in the future, and they are laying the groundwork to defend its necessity. The debate over that necessity is also an argument for another day.
The GOP says that a news article in the Des Moines Register focuses on a theme that appeared in various publications, including The Register, last month, centering on the assertion that the bill did not save commercial property taxpayers as much as the Legislative Services Agency (LSA) predicted it would. Those articles also stated that local governments lost more in property tax revenue than LSA said they would. It is important to note that the articles seem to be based on the fiscal note for Senate File 295 and on a January 2017 Issue Review (both authored by the same LSA fiscal staff person). It is also important to note that the author of those documents was not contacted to explain, verify, or provide context for those documents in the articles in question.
So could both of those assertions be true? Could the bill not save as much money for commercial taxpayers as predicted, and at the same time cost local governments more than projected? Seems like rational minds would conclude those two premises cannot be true at the same time. So let us examine them separately.
Did commercial property taxpayers see the savings the bill projected?
Yes. The articles make a significant error of understanding when they say that the bill was predicted to save commercial property taxpayers $218 million in FY 17 and that it only saved $125 million. The only way that is true is if one conveniently leaves out the fact that the legislation also had a Division One. So what did that particular division of the bill do? Well, it gave commercial property taxpayers a tax credit totaling $123.9 million in FY 17. Since that would seem to save commercial taxpayers quite a lot of money—it should have been included in the “savings” calculation the authors utilized. Then the articles would have no choice but to draw the conclusion that the legislation did in fact save commercial property tax payers exactly what it was projected. The articles essentially ignored half of the actual property tax relief.
Was the impact on local governments more than the bill predicted?
No. The articles erroneously concluded that the revenue loss to local governments was well above the projection. To reach that conclusion they compared the Fiscal Note’s estimate of the revenue loss to the Issue Review’s calculation of the maximum revenue loss that could have occurred (from the Issue Review, the maximum was $107.2 million). Those two are not the same thing.
The Issue Review (had it been properly understood) clearly states that the loss described is the maximum. The loss minimum is actually $0. What local governments actually lost is somewhere in-between, and likely very close to the loss projected in the fiscal note ($25.9 million from table 4 of the fiscal note). The Fiscal Note estimate assumes local governments set higher rates than they otherwise would have in response to having less taxable value than they otherwise would have. The Issue Review assumed nobody raised rates (which we know is not true). The Issue Review and Fiscal Note had a different methodology on this issue and clearly stated that.
The articles would have undoubtedly been compelled to explain all of this had they actually contacted the author of these documents or made the effort to understand the legislation. Property tax rates go up and down as cities see fit. There is no “legislated” rate increase. Some articles would seem to imply that the legislature has the authority to raise rates. That is just not true, it is the cities that have the expansive ability to raise rates on several types of levies they have control over. To imply that the legislature controls that is just erroneous.
If one is going to debate the impact of SF 295, it is important to interpret the data correctly and have an understanding of the entire bill while doing it.
Remember you voted republican, now you pay for it
Bodie – Are you talking about the welfare corporations in worth county being enriched by our not so honest county supervisors ? I will agree with you on that fact. ps – kickbacks $$$$$ are the root of evil of these swamp dwellers.
The economy has been going downhill for 17 years – a lot of small businesses were and are going broke – hence it was was better to get some revenue out of the small businesses and keep them off welfare than to let them go by the wayside. Public servants cannot comprehend how the private sector has to keep a budget and slim down – all the while their paychecks keep increasing every year – try paying your own health insurance you leeches – $10/15K per year. Your living in wonderland along with your welfare farmers acting like their hurting – puke/puke!
What about the welfare corporations? Do they count too? So, take out the welfare public servants, the welfare farmers, the welfare corporations and the welfare poor, what do you have left? Fools like you who think that hatred and jealousy are the only way to live their lives. One could also throw religious institutions in there also because they pay no taxes. And welfare politicians too.
Everything went to hell under Obama and stayed that way until we got rid of him and his liberal friends.
Yes, you bet. Before President Obama, there was no corporate welfare, no farm subsidies, no poor, no fat whatsoever. That is another intelligent comment from you.
It sure got a hell of a lot worse under the criminal Obama. Now where is your intelligent comment? We are waiting and just hear crickets.
For a teacher you sure are dumb and a sheeple.
Oh, you got me good LVS.
Hey Bo….. in all your years of teaching I bet you have encountered 3rd graders with more adult language and vocabulary skills compared to LVS. He’s a real piece of work; childish, immature and a bully.
But, still more intelligent than you will ever be.
Train WRECK – you know the state provided the lost revenue back to the corrupt cities and county funds and NO property taxes we raised due to this tax break for the struggling small business owners in Iowa – Your part of the democratic communist party that has been destroying America for years with your democrap owned MSM and your falsehoods and lies – The general public is on to your crooked scheme and lies so go somewhere and DIE.
I have no political affiliation (aligning with a political party is for the weak minded). I do have advanced degrees in finance and can tell you that lowering property taxes on commercial property will not create meaningful job growth. I can also tell you the state ‘backfiil’ Has not offset the loss in tax revenue from these commercial tax breaks and your residential tax bill has increased to compensate.
Choo-choo! TRAIN WRECK!! This commercial property tax relief has been disasterous. It was implemented under the guise that it would create jobs (BTW, any intelligent person could have told you it wouldn’t).
The result? Iowa cities have had to pump up residential assessments to compensate and Iowa now ranks forty-something for job growth (nearly dead last).
Those POOR farmers driving around in $70,000 pickups should also raise an alarm to the private sector working class. If they have a bad year / Yea right! They pay NO property tax . Don’t see anyone else getting away with this . Our Iowa legislature is stuffed with farm owners who seem to pass bills for their benefit at the expense of non corporate farmers and the general public . Nothing honest about politics and more than a few elected officials here in Iowa are selling out the private sector to foreign interests and large corporations. Hope we can convict them even after they have been voted out. What goes around comes around -These Hollywood actors thinking their staring in a movie – Weinstein to them. This was a tax relief bill for small business owners and sincerely needed. The fat cat public servants cannot stand to see the private sector get a break – Public sector wants your money and China wants our hogs – A great price will be paid for both of these goals.
First group to complain was the corrupt Iowa Teachers Union – School boards can raise your property taxes at a whim. This bill just slowed their yearly fat cat increases and gave a small break to small private businesses – I can’t figure out why the public sector keeps biting the hand that feeds their GREED ? Maybe it’s time for a complete and honest overhaul of our public servant mafia style ripoff on the Iowa Private sector. The private sector has been Bullied long enough by these gangsters.
“…the corrupt Iowa Teachers Union”? Say it ain’t so BODACIOUS!!
Key words here are approved by legislature (Democrats and Republicans).