DES MOINES – A retooled version of a property tax bill melding elements of earlier proposals from Republicans and Gov. Terry Branstad in an effort to move closer to a Senate Democratic plan likely will be debated by the House next week.
On a party line vote Feb. 8, the House Ways and Means Committee approved House Study Bill 519. Under the plan, commercial property would be taxed at 60 percent of its assessed valuation rather than the current 100 percent. That reduction would be phased in over eight years. Also, it includes a an accelerated small business property tax relief plan to get businesses with an assessed valuation of $400,000 or less to the 60 percent threshold in five years.
It will provide $100 million in backfill to local government for the loss of revenue the first year and increase that over five years to $210 million.
Under HSB 519, the state would pick up 100 percent of the school foundation levy, which Ways and Means Chairman Tom Sands, R-Wapello, said, is dollar-for-dollar property tax relief on all classes of property – agricultural, residential, commercial and industrial.
The also would limit the growth of local government and slow the projected increase in the taxable value of residential and agricultural properties, he said.
House Democrats said they have been ignored in the multi-year negotiations between their Senate colleagues and the governor’s office.
A person could have fallen asleep for a year, woke up today and they wouldn’t notice any difference in the property tax debate,” said Rep. Nate Willems, D-Lisbon.
“The legislative process is about compromise … not just between the right hand and the far right hand, but actually between Democrats and Republicans,” he said. “This bill signifies that House Republicans are not serious about reaching a compromise this year … about actually delivering commercial property tax relief.
“There are many people who thought this committee was serious about actually helping Iowa business this year,” Willems said. “With all the build-up about commercial property tax relief, if we cannot turn that into a reality this year, I don’t know why Iowans would believe any of our promises.”
Sands conceded there is room for well-founded skepticism. However, he’s encouraged that “the entire body, everybody in this building, is talking about property tax relief and different ideas on how to get there,” Sands said.
He hopes the accelerated small business property tax relief will make the plan more appealing to Senate Democrats. Their plan, according to Ways and Means Chairman Joe Bolkcom, D-Iowa City, would provide four out of five commercial building owners a 40 percent-plus tax cut without shifting the tax burden on to residential property owners.