Des Moines mayor asks Iowa to make property tax payments
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Des Moines is asking the state of Iowa, hospitals and other owners of tax-exempt property to make payments in lieu of taxes.
Why it matters: The payments could help the city avoid closing a city pool or reducing library and police services — ideas recently discussed to cover a projected budget gap created by a cap on local governments' property tax growth.
Driving the news: Mayor Connie Boesen told council members on June 29 that she'd sent letters to Gov. Kim Reynolds and the city's hospitals, asking them to consider a payment in lieu of taxes (PILOT).
- The city's tax base is too limited to absorb the impact of the new tax restrictions, she wrote in letters obtained by Axios.
State of play: Polk County has about $8.99 billion in property value that isn't taxed, according to the county assessor.
- That means exempt property accounts for about a third of the county's property value —equivalent to about 41% of the $21.98 billion taxable base.
By the numbers: Public schools, including colleges and Regents facilities, account for over $2.4 billion of the untaxed value.
- Churches or property owned by religious institutions have almost $1.38 billion.
- Charitable hospitals have nearly $893 million.
- Property owned by the municipalities, state, county, and federal governments accounts for much of the rest.
Context: Property taxes are the primary revenue source for city and county governments.
- Metro leaders have long said the large number of exempt properties leads to higher rates for essential services, such as streets and fire protection, used by all property owners.
- A voluntary PILOT program was created in 1998, with hospitals once pledging to pay DSM $860,000 annually.
The latest: No hospitals have made PILOT contributions in the last five fiscal years.
Meanwhile, other entities contributed in the fiscal year that ended in June, with the largest from the DSM Airport Authority ($3 million), DSM Water Works ($1.4 million), and Wastewater Reclamation Authority ($1.3 million).
Zoom in: Boesen's May 26 letters also went to UnityPoint Health, Broadlawns Medical Centers, MercyOne, Iowa Finance Authority and the University of Iowa's Pappajohn Education Center.
The other side: Local taxes on state property can shift costs from city taxpayers to state taxpayers.
Plus: State offices, hospitals, schools and nonprofits also anchor Des Moines' economy, providing tens of thousands of jobs in the metro.
What they're saying: The city had not received written responses to Boesen's letters as of late Tuesday, city spokesperson Peter Zemansky tells Axios.
- Boesen told Axios the only acknowledgment she was aware of came from Broadlawns CEO Proctor Lureman, who she said referenced receiving the letter during a recent council meeting.
- The governor's office did not respond to Axios' request for comment Tuesday.
Iowa's new property tax law created a Polk County PILOT task force, but its scope appears narrower than Boesen's request.
What's next: Boesen asked Reynolds for a meeting and said Des Moines wants a representative on the task force, which must make recommendations to the Legislature by Jan. 10.