Property Tax Passes the Senate – House Amends
The Senate this week passed their version of property tax reform with a vote of 29-21. If you have been following the property tax discussions the last three years, their plan isn’t anything new, same concept as last year – a business property tax credit modeled after the homestead tax credit.
The House on Wednesday amended the Senate File with their proposal, along with a few new items. The goal being, to try to get the property tax bill into a conference committee, something that eluded both chambers the last two years. Below are the major pieces that will be considered if the bill goes to conference committee.
Rollback
- 20% rollback of taxable value on commercial and industrial property. 5% per year over 4 years
- Approximately $339 million in property tax relief when fully implemented
Backfill
- A standing unlimited appropriation is created to backfill lost revenue to local governments.
- Backfill appropriation is exempt from future “across the board” cuts
- TIF properties held harmless
- FY 15 $77 million
- FY 16 $159 million
- FY 17 $248 million
- FY 18 $339 million (then capped at this level moving forward)
Assessment limitation
- Assessment growth limitation moves from 4% to 2% on Ag and residential immediately
- After the 20% forced rollback, three classes of property are tied together with a 2% assessment growth limitation (Commercial, AG and Residential)
- Industrial will not be tied with the other three classes, but will mirror commercial. Meaning, whatever commercial is assessed at, industrial will receive the same treatment.
School District Funding
- Raises the school foundation formula from 87.5% to 95% over 4 years
- FY 15 $75 million
- FY 16 $154 million
- FY 17 $236 million
- FY 18 $322 million
Multi-residential Property Classification
- Adds a new property tax classification for nursing homes, assisted living facilities, residential care facilities, mobile home parks, manufactured home communities.
- Assessed as commercial the first year, then rolled back to 60% over four years. At that point, taxed the same as residential
Telecommunications Property Taxation
- Central office equipment is exempted from taxation
- Land, buildings and outside plant is then rolled back to 80% the first year, 60% the second.
Senate Democrats Plan – Senate File 295
- Business property tax credit beginning July 1, 2014. Similar to Homestead tax credit
- Available to Commercial, Industrial and Railway properties that have permanent construction (no vacant lots).
- Requires legislature to annually appropriate $50 million from General Fund
- Growth Trigger- Revenue Estimating Conference must certify total amount of general fund revenue growth by 4% compared to previous year before additional $50 million
- $250 million per year is the maximum amount that could be appropriated
- Properties valued at $324,000 or less will receive a tax credit equivalent to the residential rate. Properties valued at more than $324,000 will receive a tax credit on the first $324,000 of their property.
- Counties will also receive backfill to cover lost revenue.
- Small businesses are treated differently than larger businesses. No incentive to expand footprint in state.
Budget Process Picking Up Steam
As the calendar moves towards the end of the 2013 legislative session, the work on the FY 2014 and FY 2015 state budget is moving into high gear this week as both chambers spend significant time working on spending bills.
In the House, the Economic Development appropriations bill (SF 430) was passed by the chamber on Tuesday. The House amendment provides the largest percentage growth of all the various budgets, with a 19% increase in funding to attract and maintain businesses to the state. This does not include funding for the High Quality Jobs program, which is addressed in the infrastructure bill.
In the House Appropriations Committee, the budgets for Agriculture and Natural Resources, Judicial Branch, and the Rebuild Iowa’s Infrastructure Fund were advanced to the floor. The Agriculture bill, Senate File 435, includes a $1 million General Fund increase. The new funds are being used to maintain on-going services provided by the Department of Agriculture, Department of Natural Resources, and the ISU Veterinary Diagnostic Lab. The Environment First Fund is also fully funded at $42 million.
In the RIIF bill, the House is continuing its efforts to return the focus of this fund to infrastructure projects. Major projects completed in the bill are the prison construction work at Fort Madison and Mitchellville, the Dental building at the University of Iowa, the Ag/Biosystems Engineering complex at Iowa State, and the renovation of Bartlett Hall at UNI. The bill also increases funding for lake restoration and water quality as long as increasing the emphasis on maintenance work on state facilities.
Funding for the High Quality Jobs program is continued in the RIIF bill, by using returned or unused funds from the Grow Iowa Values Program which no longer is in operation. Among the new projects included in the bill are beginning work on renovating the Wallace building, looking into the future of the state historical building and three new projects at the Regents institutions.
On the other side of the Capitol, the Iowa Senate has a number of budgets ready for consideration this week. It is expected that by the end of the week, action will have been taken on the Justice Systems (SF 447) and Health & Human Services (SF 446) budget which they are responsible for starting. Also, they are expected to consider the Administration & Regulation (HF 603) and Education (HF 604) budgets.
At the end of the week, the only budget bill that has yet to be released is the Standing Appropriations bill. The Senate is responsible for starting action on this bill.
Most of the budget bills will end up in a conference committee where details will be negotiated out and compromise will be worked out.
Tuesday night the House held a public hearing on SF 296. The public was invited to speak before lawmakers about Medicaid expansion and the Governor’s Healthy Iowa Plan. Citizens from both sides of the issue spoke and gave their input. The legislature is currently still working through the vast information on both sides of the issue. There is a lot of misinformation out there. We at the Statehouse will sort through it and make the right decision as to what is best for Iowa.
If you have any questions, comments or concerns about these topics or any others please feel free to contact me by e-mail at lee.hein@legis.iowa.gov or by phone at (515) 281-7330.
Sincerely,
Rep. Lee Hein
Lee Hein 