October 24, 2023
Case Study: How Iowans for Tax Relief Foundation Reigned in Property Taxes in the Hawkeye State
If you want a good scare, don’t buy a ticket to the latest slasher flick, just tell a local bureaucrat you’re going to cut property taxes. They’ll paint some of the most terrifying and apocalyptic images you can imagine.
In Iowa, property taxes have become a drain on family’s budgets for years. Since 2000, total property taxes collected in the state have increased 119%. That outpaces increases in the state population, inflation, or the cost-of-living adjustment for Social Security. In recent years, the Tax Foundation ranked Iowa as having the 10th highest property tax burden in the nation—and the state’s last substantial property tax reform took place in the late 1970s.
Iowans deserve better. And as soon as the 2022 legislative session ended, the Iowans for Tax Relief Foundation (ITRF) began their campaign to finally win property tax reform in The Hawkeye State.
The Foundation has long been the trusted voice for tax reforms in Iowa. In 2018, they helped pass Iowa’s largest tax relief measure ever. Then in 2022, they helped lead the charge to phase Iowa’s progressive tax system (with a top marginal rate of 8.53%) to a flat tax of 3.9% in 2026.
In other words, the Foundation makes tax reforms happen.
Leading up to the 2023 legislative session, the organization identified property taxes and local government work as their biggest issues to prioritize. So they quickly got to work on their Property Tax Toolkit.
This was an all-encompassing report which showed Iowans where their tax dollars were going and what reforms could save homeowners hundreds, if not thousands, of dollars each year.
Once their toolkit was published in December 2022, the Foundation sent copies to state lawmakers, local officials, community influencers, and ITRF members. They also hosted events across the state promoting property tax reform solutions. Additionally, ITRF placed eight different property tax reform op-eds (some written in collaboration with SPN network colleagues) in various papers across the state.
The impacts of the Foundation’s work came quickly.
For example, one of ITRF’s first research projects exposed how many local governments were denying taxpayers property tax relief from the state.
In 2021, responsibility for providing mental health services transitioned from county governments to the state. This meant that beginning in FY 2023, Iowa’s 99 counties no longer needed to levy property taxes to fund those services. However, ITRF research showed how nearly half of Iowa counties failed to pass along the full amount of the mental health savings.
Legislators weren’t pleased when they found out counties were keeping savings meant for taxpayers. A number of legislators shared ITRF’s research in their constituent newsletters. Some of them also contacted ITRF for more detailed data they could use to address this within their legislative districts.
In addition to their toolkit and outreach, ITRF also conducted statewide polling to gauge Iowans thoughts on the state’s tax burdens and show the support for real property tax reforms. Their polls showed 67% of Iowans supported limits on how much local governments can tax and spend. And since local government levies are some of the biggest contributing factors to property taxes, this would undoubtedly have significant impact on Iowans’ property tax bills.
Early in the 2023 legislative session, both the House and Senate introduced vastly different property tax proposals that incorporated both good and bad policies. To shape subsequent property tax proposals for the better, ITRF gathered more statewide and county-level data to expand their toolkit.
However, a roadblock ITRF’s team consistently faced was local officials’ threats to cut key services in response to local spending limits. However, thanks to ITRF research, many of these doom-and-gloom predictions were easily refuted.
As ITRF’s President, Chris Ingstad explained, “When [reformers propose] a reduction in local government spending, don’t be surprised to hear local officials balk about cuts to police and fire services, or having to leave their snowplows parked all winter long. These scare tactics aren’t new and are frequently used to oppose any changes to the status quo. However, those types of cuts are one of the many fallacies floated around during property tax debates. In fact, Iowa state law requires local governments to provide many of the core government services we rely upon. When the growth of local government is slowed, functions such as water parks, economic development, art sculptures, and other nice-but-not-essential things will likely be the first items considered when reductions need to be made.”
In the end, thanks to ITRF’s incredible research and work, the property tax reform bill HF718 passed with overwhelming bipartisan support and was signed into law.
Analysts estimate that HF718 will deliver $100 million in direct tax relief while providing additional transparency and enhanced taxpayer protections. The bill also includes many proposals directly from the ITRF toolkit like levy consolidation, direct notification, November-only bond elections, adjusting levy rates as valuations rise, and reducing the state’s cost for urban renewal practices.
Iowans waited a long time for property tax relief. And despite the horror stories local officials tried to tell, state legislators—guided by ITRF—passed tax reforms that will deliver real results for taxpayers.
For their success in bringing much needed tax relief to Iowa families, Iowans for Tax Relief Foundation was a finalist in State Policy Network’s Bob Williams Award for Outstanding Policy Achievement—in the “Biggest Home State Win” category.
