Linda Schreiber writes commentary on selected legislative issues.
Bob Dylan’s 1964 lyric, “The times they are a-changin’,” captured a moment of upheaval. The same could be said today—especially when it comes to how Iowa funds its communities.
A decade ago, when lawmakers reduced state funding for schools and local governments, cities and counties could adjust their budgets and, if needed, raise property taxes to maintain services residents wanted. Today, that flexibility is disappearing. And therein lies the paradox.
Throughout the first year of the 91st Iowa General Assembly, lawmakers debated cutting property taxes. With Republicans holding a trifecta, this is the year those cuts may pass. Two GOP proposals emphasize a strict 2 percent cap on local property tax revenue growth, promoted as relief for taxpayers. If state-level cuts reduce local revenue, will the result be fewer services Iowans rely on?
Property taxes a top GOP priority
Republicans rank property taxes as the top issue this session. According to the nonpartisan Tax Foundation, Iowa ranks 33rd in property tax competitiveness.
In her Condition of the State address on January 13, Governor Kim Reynolds proposed a sweeping property tax overhaul. Her office projects her plan would cut $3 billion in property taxes over six years—reducing local government revenue growth by the same amount. Senate Study Bill 3043, the property tax bill introduced by the governor, caps local revenue growth at 2 percent, excluding new construction, and allows exceptions for debt service and school funding. It also lengthens the property assessment cycle from two years to three and freezes property taxes for homeowners age 65 and older with homes valued at $350,000 or less.
Additional elements include a tax-advantaged savings account for first-time homebuyers and a $10 million grant program to encourage shared local services—something many communities already pursue when feasible.
House Republicans introduced House Study Bill 596 on January 21. Beginning in 2027, it would limit property tax assessments to a 2 percent annual increase, exempting new construction. The House bill also provides a $25,000 residential tax exemption for all homeowners, requires a 60 percent voter approval for bonds funded by property taxes, and directs county auditors to use plain-language tax notices, with enforcement by the Iowa Department of Management.
The Senate GOP’s property tax proposal, Senate Study Bill 3001, goes further. It proposes full state funding of K-12 education to reduce school property tax levies, eliminates the rollback mechanism on taxable value, and replaces it with a 50 percent exemption on a primary residence up to $350,000. By 2029, homeowners age 60 and older who have paid off their mortgages would be exempt from property taxes entirely—excluding voter-approved levies and limited to a half-acre. The plan also indexes the gas tax to inflation (note: Iowa Republicans are often reluctant to tie issues to inflation), and expands military service exemptions from $4,000 to $7,000.
Iowa House Democrats have introduced their own proposal, House Study Bill 563, which would cap property tax growth at 4 percent and freeze residential property taxes for Iowans 65 and older. Their plan also includes a two-year $1,000 rebate for homeowners and $500 for renters, funded by the $4 billion Taxpayer Relief Fund. In addition, Democrats propose tripling the Homestead Tax Credit and requiring the state to match police, fire, and EMS retirement contributions.
Taxes—and governance—are complicated
Iowa’s property tax system did not become complex by accident. Although a 1968 constitutional amendment granted cities home-rule authority, decades of legislative carve-outs have steadily weakened local control—especially over taxation. Local governments remain responsible for essential services while being denied meaningful authority over the revenue needed to fund them.
When the state reduces its financial commitment, cities and counties face impossible choices: cut services or raise property taxes. This year’s proposals remove even that choice. Instead, they shift responsibility to voters by requiring supermajority ballot approval (60 percent) to fund bond infrastructure and services.
That is not tax relief; it is a shell game that shifts accountability from lawmakers and requires taxpayers to make a choice.
Iowans value local decision-making. Yet state-imposed tax caps and supermajority requirements tie the hands of officials who best understand local needs.
Real-world consequences
According to the Common Sense Institute Iowa, the state will face a shortage of nearly 16,000 homes by the end of this year. Housing shortages suppress property tax growth even as demand for services rises. Property taxes remain a primary funding source for roads, schools, public safety, utilities, parks, and waste disposal. No state has ever repealed property taxes without replacing the revenue. When funding disappears, everything breaks down.
There is always room to debate efficiency, but there is no debate that local governments need substantial, reliable revenue to function.
Despite their unpopularity, property taxes have a feedback effect: better schools and services increase property values. While imperfect, they reflect community investment.
The timing of these proposals is troubling. After years of underfunding key services and tax cuts skewed toward the wealthy, Iowa is spending more than it takes in, with budget deficits likely to continue for years. Families are already struggling with rising costs—from inflation and tariffs to health care and property insurance. Meanwhile, wages haven’t kept pace with the cost of living. Yet lawmakers continue to prioritize tax cuts, expand private-school vouchers that disproportionately benefit wealthier families, and pursue trade policies that weaken Iowa’s economy.
Public schools feel the impact most acutely. When state funding fails to keep pace with costs, districts consolidate, cut programs, delay maintenance, or turn to local voters—deepening inequities between communities that can raise revenue and those that cannot. Rural and lower-income districts suffer the most.
Accountability matters
Iowans want practical solutions, not political talking points. They want lawmakers to address real challenges: affordable child care, rising insurance costs, workforce shortages, and stagnant wages. Investments in these areas strengthen families and the economy alike.
Lawmakers must own the consequences of their actions. Property tax cuts that hollow out local services fail the test of fiscal responsibility. Cutting costs may sound appealing, but responsible governance requires more than slogans.
Iowans are not asking for handouts. They are asking for accountability, transparency, and fairness—budgeting that reflects Iowa values: strong communities, local control, and a fair shot at a decent life.
True relief strengthens Iowa from the ground up. Weakening the institutions that hold communities together does the opposite. What happens this session will depend on whether lawmakers listen—and whether Iowans demand that they do.
Editor’s note from Laura Belin: On January 29, Republican lawmakers on two Iowa House subcommittees advanced property tax bills submitted by the governor (House Study Bill 563) and the House GOP (House Study Bill 596). Democrats voted against moving both proposals to the full House Ways and Means Committee. During those subcommittee meetings, representatives of local governments warned that both proposals could prevent cities and counties from providing services, maintaining infrastructure, or pursuing economic development opportunities.
The Senate Republican property tax proposal has not yet been considered at a subcommittee hearing.