Property Tax Is Key Issue For Iowa Legislature

Iowa Farm Scene

Iowa lawmakers begin 2013 session under the golden dome in Des Moines, with several ag related issues on the agenda.

Published on: January 17, 2013

The Iowa Legislature began its 2013 session January 14. Budget issues and property taxes are top items on the agenda as legislators get the 85th Iowa General Assembly underway. Farmers and ag organization leaders will be watching carefully to make sure they don't get the short end of the stick as a result of commercial property tax reform. Gov. Branstad and many state lawmakers agree that commercial property taxes are too high in Iowa and they want to lower them. But there is considerable disagreement over the best way to reduce commercial property taxes without harming local governments or raising property taxes on residential or agricultural property.

"We don't want to see a shift in property taxes that would end up putting a heavier tax burden on farmers," says Matt Steinfeldt, state policy adviser for the Iowa Farm Bureau Federation. Leaders of other Iowa ag organizations share that concern that such a change might eliminate or alter the present productivity formula used to calculate taxes on agricultural land.

With increases in production and the recent jump in rural land values, ag property taxes are going to gradually rise anyway. Some lawmakers suggest the state might choose to slowly phase in a program that would shift more of the funding for education and schools to come from state government, so education could be funded by some other method than by local property taxes. However, first the lawmakers will have to decide on how to solve the commercial property tax piece of the puzzle. That's the initial step.

Budget surplus, water quality, fuel tax and improving state's roads and bridges
What other issues will the Iowa legislature likely deal with in 2013? The state this year has a budget surplus as tax revenues have been high, thanks in large part to a strong ag economy. Lawmakers will debate how to spend the money. Some state government departments and agencies have been underfunded in recent years and are asking for increases. Also, some of the budget surplus could be used to fund one-time expenditures or could be used to help pay for fixing the commercial property tax situation. Of course, everyone wants a part of the surplus.

The Iowa Farm Bureau will focus on protecting property taxpayers in 2013, says Craig Hill, a Warren County farmer who is president of IFBF. The head of the state's largest farm organization sees property tax reform, water quality and infrastructure improvements to the state's deteriorating roads and bridges as important issues that need to be addressed in the 2013 legislative session.

Iowa's unprecedented property tax growth impacts all residents of Iowa
Iowa's unprecedented property tax growth impacts all Iowans, says Hill. "Property taxes have increased by over $2 billion since the year 2000, an increase of more than 75%. Farm Bureau members believe the primary objective of property tax reform should be to reduce the property tax burden on all classes of property. As lawmakers address issues such as commercial property tax reform,  Iowans need to be assured that any reform affecting one class of property would not bring a shift to other classes of property. In addition, reasonable property tax growth limitations are needed so property tax collections do not continue to outpace the economy and family wages."

Controlling growth of property taxes is just one of several IFBF priorities. Members support using the state's ending fund balance which will total hundreds of millions of dollars, on one-time expenditures such as property tax relief or infrastructure, as opposed to being used for ongoing government expenses.

State fuel tax increase could provide added revenue to fix roads and bridges
"We're at the point where more and more local governments are turning to bonding as an alternative source of revenue to pay for deteriorating rural roads. Last year alone, rural property owners paid over $140 million in property taxes to their local roads and bridges," says Hill. IFBF policy calls for an increase in the fuel tax to bring additional revenue for road improvements. "Iowa's fuel tax hasn't been increased since 1989 and would insure that users of the roads, including out-of-state motorists, are paying directly for the infrastructure repairs. A user fee is definitely the most equitable and fair method of funding," he adds.

Many of Iowa's roads and bridges are badly in need of repair or rebuilding. Recent studies have shown that an additional $215 million per year is needed to repair and replace Iowa's aging highways and bridges.

Another ongoing priority for IFBF is soil conservation and water quality. The recently-unveiled Iowa Nutrient Reduction Strategy is a science-based plan, which helps farmers and watershed stakeholders reduce or better control nutrient runoff and pollution. Developed by the Iowa Department of Agriculture and Land Stewardship, the Iowa Department of Natural Resources and Iowa State University researchers, the plan offers many options to improve targeted, voluntary watershed improvements.

More conservation cost-share funding needed to help meet goals of Iowa's new nutrient reduction plan
Under the plan, IDALS will work with farmers to maintain agricultural productivity, protect natural resources and reduce nutrient losses, and the Iowa DNR would work with major cities and industries to reduce nutrient discharges into Iowa's waters. "This technology-based, solutions approach will be more effective than a one-size-fits-all type of program that would result from regulations," says Hill. Farm Bureau members will also work to secure adequate funding from the state legislature to meet the demand of conservation programs.

Also, Farm Bureau will advocate for the Iowa Legislature to continue its long-term commitment for agriculture research at ISU. "We support a proposed $7.5 million appropriation for bioscience research and development at ISU," says Hill, "which will leverage federal and private research investments and create more collaborative opportunities involving university researchers, private companies and local farmers and businesses." In addition, Farm Bureau supports the creation of a research advisory board to give farmers an opportunity to provide input on research priorities. This would also help minimize duplication in research efforts, he says.

Regulatory reform is also a continued IFBF legislative priority, since unwarranted or excessive regulations add unnecessary costs to farming, which impact food costs for all, Hill says. IFBF policy calls for limiting the rule-making authority of state agencies, appointed boards and commissions.

Ag secretary is asking for increase in cost-share funding to get Iowa Nutrient Reduction Strategy started
Iowa Secretary of Agriculture Bill Northey is asking the Iowa Legislature for an increase in cost-share funding for conservation programs, in the amount of $2.4 million to get the state's new Iowa Nutrient Reduction Strategy started. This would be for the 2014 fiscal year which begins July 1, 2013. Connected to that budget discussion will be talk about the proposed voluntary nutrient reduction plan and the effort to improve the state's water quality. Northey is determined that this strategy be a voluntary plan for farmers and landowners, not a regulatory effort to force installation of more conservation structures and use of conservation farming practices on the land.

What do other ag organizations besides Farm Bureau think about the idea of raising the state's gas tax and using the money to improve roads and bridges? Most Iowa agricultural groups favor this proposal. "That's about the only way we're going to be able to improve our rural roads and bridges," says Carol Balvanz, director of policy development for the Iowa Soybean Association. The Iowa Corn Growers Association also supports increased funding to improve roads and bridges, including a fuel tax increase used for that purpose.