Cities face tough choices amid Iowa's new property tax limits
Add Axios as your preferred source to
see more of our stories on Google.
Illustration: Aïda Amer/Axios
Iowa's city and county governments are finalizing budgets under new state formulas that significantly curb their ability to collect new property taxes.
Why it matters: If local government budgets are cut, essential services for residents like garbage collection, park maintenance, and street repairs will be affected.
Catch up quick: Property taxes are a crucial revenue source for local governments, but state lawmakers have limited their growth, citing excessive increases.
- Changes made in 2023 take full effect in the fiscal year starting in July.
Zoom in: Des Moines faces a $17 million shortfall.
- Polk County Supervisors may approve less than 20% of $6 million in department funding requests for things like staff wages and facility upgrades.
What they're saying: A growing disconnect between state lawmakers and local governments is having some cities question their ability to expand, Alan Kemp, director of the Iowa League of Cities, wrote to members this month.
- Waukee Mayor Courtney Clarke recently debunked misconceptions about city finances, noting many residents with homes valued at $400,000 pay about $8 a day in municipal taxes.
The other side: There is no political will in the Legislature to reverse limits on property tax growth, Rep. Bobby Kaufmann (R-Wilton) told Axios in 2023, a few months after he helped pass legislation that is expected to reduce revenue by about $100 million annually.
Republicans last week rolled out bills that would place further limits on property tax growth and increase exemptions for veterans and some elderly populations.
Here are three ways the budget changes are affecting the metro:
Franchise fees
DSM, Johnston, and Norwalk are considering franchise fees on natural gas and electricity to replace property taxes or other fees for police and public transit.
- Republicans, however, have introduced a bill to ban them.
Municipal debt
Iowa city debt hit a record $8.27 billion last year.
- Some cities may borrow more for infrastructure projects, per the Iowa League of Cities.
Service cuts
DSM leaders reconsidered closing Birdland Pool and slashing Polk County Emergency Management funding.
- But rotating pool closures and staff reductions remain options.
The big picture: More severe cuts loom in future budgets, Polk County Supervisors Chair Matt McCoy tells Axios.
- Talks of merging services and governments will likely emerge, he says.
🗓️ What's next: DSM's next budget hearing is March 24.
- Local budgets are due to the state by April 30.