The Iowa Governor Terry Branstad’s highest priority at this time is property tax reform. The legislature begins a new session next month. Reforming the property taxes is something Iowa House and Senate did not accomplish earlier this year.
All concerned parties, which includes the Governor, the Senate (Democratic) and the House (Republican), are all in agreement on this matter. Commercial property owners must have tax relief. It is rare for such a diverse group to agree on something, which makes it all the more obvious how crucial this property tax reform is.
Commercial property in Iowa is taxed on 100 percent of its assessment. It is higher than commercial tax rates in surrounding states. It is also significantly higher than agricultural and residential property. Although all concerned parties agree there must be property tax reform, they do not agree how it is to be structured.
Legislators in the House Republicans propose a reduction of the percentage all industrial and commercial property is taxed. The increases in tax rates local governments can impose will be limited. Revenue growth is expected to compensate for the reduction on the taxes.
Democratic legislators want to reduce taxes for commercial properties and give larger reductions to local businesses. This would avoid tens of millions in cuts going to those large corporations that have headquarters located outside of Iowa. They also propose reducing the cost to local governments with state funding.
Branstad, a Republican, wants to tax commercial property at only 60 percent of its assessment. This property tax reform measure is expected to result in a tax loss of $200 million annually.