Jun 2, 2021 - News
Des Moines faces new property tax pressures under Iowa bill
Illustration of sharks circling a pile of money.
Illustration: Aïda Amer/Axios

If you own a median-priced home in Des Moines, you could have to pay at least $50 more in annual property taxes following the Iowa Legislature's decision to end a backfill program, according to information presented to the City Council last week.

Driving the news: Under the bill passed last month, annual backfill payments of up to $152.1 million will be phased out by the fiscal year that begins July 1, 2030.

Flashback: The money was part of a plan to offset revenue losses for local governments after state lawmakers made sweeping commercial and industrial property taxes cuts in 2013.

Why it matters: The backfill was created to help avoid a tax shift to homeowners, and the potential outcome of its removal runs counter to the city's — and many state lawmakers' — long-term goal of lowering property taxes.

By the numbers: Iowa schools will ultimately lose nearly $60 million annually; cities $52.4 million and counties $29.6 million, according to state estimates.

  • That's a $600K hit for Des Moines, the equivalent of a 60-cent property tax rate increase, City Manager Scott Sanders told council members Friday.
  • Don't forget: Des Moines lowered its tax rate by 60 cents a few years ago because of a penny sales tax yet it still maintains the highest rate in the metro.

What they're saying: Democrats are accusing Republicans of breaking promises, while Republicans say the assistance was never intended to be permanent.

  • Republicans also noted other actions this year that they say will reduce local government burdens, such as paying for mental health services.

Yes, but: Many factors are in play and a lot can happen over the next eight years.

  • Supporters of the phaseout believe that recent increases in property valuations can help local governments avoid tax rate increases, Doug Struyk, a lobbyist for the city of DSM, told council members Friday.
  • Of note: Des Moines' median house price is now at about $145K.

Our thought bubble: The sky isn't falling, but Sanders' point should be taken seriously to prepare for and minimize the possible negative consequences.

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