Tuesday marked the 100th calendar day of the legislative session, signaling that legislators’ time in the Capitol will soon be coming to a close. Much of the recent discussion has been about property taxes as legislators continue to work towards a final compromise.
Iowa House Republicans have released their most recent amendments to their property tax proposal (HF 2745), which attempts to combine several elements from both the Governor’s and Senate’s proposals:
- Keeps the 2% cap on local government revenue growth (excluding new construction, school funding, and debt services).
- Converts the homestead tax credit to an exemption, which would be tripled to $15,000. Funding from the credit would instead go towards offsetting the school foundation property tax levy.
- Transfers 12.5% of funding from SAVE (Secure an Advanced Vision for Education) to property tax relief.
- Establishes a FirstHome Iowa Accounts program.
The proposal also creates a limit on Tax Increment Financing (TIF) districts, capping them at 23 years and including a revenue usage limitation for TIF districts without sunsets to 60% (excluding existing debt). It also includes “housing” within the definition of economic development and merges definitions with workforce housing tax credit program but removes requirements for low-and-moderate-income housing (LMI).
Though these amendments have brought the House proposal closer to the Senate’s, the Senate proposal (SF 2472) still features some key differences, such as increasing the state’s homestead tax credit for all Iowans to 50% instead of eliminating it. It also allows counties and cities to raise the local option sales tax with voter approval in addition to adding a CPI inflation index to the state’s gas tax in order to help local governments access alternate revenue sources to offset revenue loss. The Senate’s proposal also outlines changes to the state’s “rollback” system which are not included in the House’s proposal.
With per diem funding now expired, legislators will be motivated to wrap up their work in the coming weeks. Before they can adjourn for the year, they must come to an agreement on the state budget. Greater IC will continue to monitor and engage on issues outlined in our Public Policy Priorities as the session draws to a close.
