Iowa lawmakers will tackle property taxes in 2023, committee leader says

ALTOONA — Property taxes will be under the microscope when state lawmakers return for their annual work next month, a key legislator said Friday.

The Republican majorities at the Iowa Capitol have in recent years passed multiple cuts to state income taxes. Dan Dawson, a state senator from Council Bluffs who chairs the Iowa Senate’s committee on tax policy, said property taxes are next.

“The one topic we really have not tackled as a Legislature for a few years … is property taxes,” Dawson said during a legislative panel discussion hosted by the Iowa Taxpayers Association at its annual meeting at The Meadows Events & Conference Center at Prairie Meadows.

“We are going to be laser-focused on property taxes this upcoming session.”

Dawson said his plan is for Senate Republicans to look at the local property tax levy system and property tax exemptions.

While state government is funded by sales and income taxes, city and county governments and school districts are mainly funded by local property taxes.

“There’s got to be a fundamental change in philosophy of how budgets are built at the local level,” Dawson said.

Pam Jochum, a state senator from Dubuque and the top Democrat on the Senate’s tax policy committee, said she is open to addressing property taxes, but cautioned that lawmakers have previously attempted the same and, in her words, “It’s not an easy thing to do.”

“To me, the rubber meets the road at the local level. … We leave it up to them to figure out how to make it all work,” Jochum said. “If we’re going to make that change, I hope we use a scalpel and not an ax. Because I know right now, local governments are way too dependent on one tax, and that’s property tax.”

Dawson also pledged to renew his effort to revamp Iowa’s sales tax system in order to stock a state fund for water quality, outdoors and recreation projects that has gone unfilled since voters approved its creation in 2010.

Last year, Dawson proposed ending all local-option sales taxes, adding to the state sales tax, and using a portion of that new state sales tax revenue for the water quality and outdoors trust fund.

Dawson appeared to rule out simply raising the state sales tax by three-eights of a cent, as prescribed in the trust fund’s creation.

“But maybe there’s another way to go about it,” Dawson said. “This can be a marriage of good tax policy as well as quality of life issues.”

The 2023 session of the Iowa Legislature begins Jan. 9.