ap photo The moon hangs over the Iowa Capitol dome in Des Moines.

Increasing property taxes have weighed heavily on the minds of Marshall County residents. They might get some relief if proposed state legislation, intended to help overhaul the complex property tax system, is implemented.

Senate Study Bill (SSB) 1227 and House Study Bill (HSB) 328 would modify several components of the property tax system. For example, it would create a $50,000 homestead exemption for each household. It would also keep components of previous property tax legislation, SSB1208 and HSB313, introduced in March, such as providing an exemption for property owners aged 70 and older.

Primarily, SSB1227 and HSB328 would replace the rollback system with a revenue-restricted system. There would still be taxes placed on the full value of assessed property. However, city and county governments would be limited on the amount of new tax revenue they could collect. Levy rates would not be allowed to increase more than two percent each year for existing structures, except for new construction.

Marshall County Auditor/Recorder Nan Benson said the exception for new construction makes sense.

“They care about increases – new growth, buildings, construction, major renovations, such as the Willard building,” she said. “That is an example of something that would be subject to the additional increase.”

Benson does not understand why the legislators do not seem interested in decreased valuations or property losses. She expressed concern about how it might impact smaller towns and counties.

“Thinking about the smaller entities, it’s going to be tough,” Benson said. “How will they make it work? It’s going to be challenging and will keep getting harder.”

The reason for the greater challenge is that it will force counties and cities to “live within their means.” While it might not make a difference in the budget process this year, she added that many changes might have to be made further down the road.

Marshall County Supervisor Jarret Heil said no one will know the full impact of the legislation until the full study is completed, but the main intention is to place the two percent cap on property tax growth.

“It forces governments to be more efficient and control spending,” he said.

It will certainly force Marshall County to prioritize, Heil added. If it becomes law, he said they would need to talk to the different county department heads for projections to prepare for the following year.

Heil also shares Benson’s concern for the smaller local governments. Marshall County and counties with larger populations will be able to absorb and handle the cap, especially with inflation.

“I worry the rural counties may not have the tax growth they need for bills,” he said. “They will be forced to find efficiencies.”

If passed, the legislation would not go into effect until 2030. While the implementation might be delayed, the process of getting to this point was delayed, as well.

“[Legislators] saw it would help commercial owners more than residential,” Benson said. “Their goal is to help the folks on a fixed income. They were looking to get something done this year, so they said this needed more work.”

Property taxes

Having a bigger impact on residential property owners will be beneficial, as the taxes have been a concerning matter for Marshall County residents. For example, Iowans for Tax Relief listed property taxes for 940 towns, and Marshalltown is considered the 151st highest. The website indicates that owners pay $3,192 annually for a $175,000 home; $5,016 on $275,000 and; $6,841 for a $375,000 home.

The state average listed on the same table states that Iowans pay an average of $2,728 for a $175,000 home; $4,370 for $275,000 and; $5,959 for $375,000.

There has been talk throughout Iowa of a desire to completely eliminate property taxes. Benson felt it was an interesting concept, but she wondered if people will want all of the services they already have.

“I don’t know how they propose we do the things we’re doing,” Benson said. “. . . There are a lot of little pieces to do the things we do for folks. They don’t like to pay for it, but then they’re not happy when it’s not there.”

In theory, Heil said he would love that as a taxpayer. However, he has not heard plans of how to pay for essential services, but the idea is certainly picking up steam.

“That tells you the public is concerned about how the current system works,” he said. “It is convoluted and confusing. There are so many layers. They want simplicity.”

Benson said the property tax system in Iowa is incredibly complex, no question about it.

“It will be interesting to see where this ends up,” she said. “I question whether or not this legislation will pass this year.”

As a property taxpayer, Heil is excited that legislators are looking into the system.

“Assessments have taken off in recent years, and local governments have more expenditures,” he said. “This will reign it in, which is important for taxpayers. We need to protect taxpayers and make sure services are available to the public.”

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Contact Lana Bradstream

at 641-753-6611 ext. 210 or lbradstream@timesrepublican.com.