Earlier this year, significant changes to Iowa’s property tax system were enacted with the signing of House File 718 into law. Now, as cities begin planning their Fiscal Year 2025 budgets, they are grappling with the law’s sweeping changes to city finances.
Impact on property taxes and city budgeting
“Property taxes are fundamental in supporting the myriad of essential services that city governments provide daily, from public safety and quality infrastructure to recreational spaces and libraries,” explained Erin Mullenix, research director at the Iowa League of Cities and data analyst with Iowa State University Extension and Outreach’s Community and Economic Development program.
House File 718 introduced major overhauls to the property tax system. One of the law's 14 divisions consolidates a number of property tax levies into one new general fund levy, the Adjusted City General Fund Levy. Depending upon tax base growth in the communities, this change restricts city and county revenue growth.
“Cities must understand these changes while planning their budgets,” Mullenix emphasized.
Guidance and resources for city officials
Recognizing cities' challenges, the League has proactively developed webinars to help city officials navigate the new property tax landscape.
“The League’s latest webinar takes a deep dive into Division II of the bill and guides city officials through consolidating levies into a single adjusted city general fund levy. It provides examples to discuss the potential impacts of levy limitations based on property tax valuation growth,” Mullenix said.
“Through my work with ISU Extension and Outreach and the League, I have heard from many communities that are looking for more resources to learn about this change. We hope to be able to assist cities and share what we know as they head into budget season,” said Mullenix.
Source: iastate.edu
Photo Credit: gettyimages-pra-chid
Categories: Iowa, Government & Policy