When members of the Iowa Legislature show up at coffee shops in their districts on weekends, you won’t hear them talking about not trusting local government officials.
But that is at the heart of a bill that would turn city and county government topsy-turvy and place a straitjacket on the governments that are closest to the voters.
House Study Bill 165 is the product of Republicans who hold a majority of seats on the House Ways and Means Committee. A subcommittee has recommended approval of the bill.
If that doesn’t occur this year, don’t assume for a minute the idea is dead. Watch carefully when the 2020 session is gaveled in because ideas rarely ever go away when the same party controls both the House and the Senate, as well as the governor’s office.
HSB 165 would limit growth of cities’ and counties’ property tax levies to a maximum of 2% every year.
That cap would be imposed regardless of what problems a city or county is facing, regardless of the goals residents have told local leaders to address, regardless of how fast costs are rising for local government.
When you mix in the financial whammy created by a disaster like the tornado that plowed through Marshalltown last year or the massive floods that caused devastation in communities and counties last month, you begin to see why this bill is dangerously shortsighted.
Peter Fisher, research director for the Iowa Policy Project in Iowa City, and David Swenson, an economic scientist at Iowa State University, issued a sobering report on the legislation recently.
They said the bill would impose unprecedented state control over the budget decisions of local elected city councils and county boards of supervisors. “The proposal markedly changes how democratic government works in Iowa,” they wrote.
Lawmakers who support the concept behind the legislation would squirm mightily when Congress thinks about telling states what they must do or how they must do it. State lawmakers like to talk about the wisdom of leaving such decisions to officials who are closest to the voters.
Fisher and Swanson said the 2% cap on growth “is completely arbitrary, rendered even more so by its application to counties and cities of all sizes, declining or growing, rural or urban, in periods of expansion or in recession, with all the variations in voter preferences that exist across our state.”
They said a community experiencing significant growth year after year is likely to face demands for more services for the growing population that outstrip the growth in the community’s tax base. “An arbitrary limit could make it difficult for a city or county to accommodate growth, particularly where more affordable workforce housing is needed,” they wrote.
“Rural areas that have lost a major employer or have simply not participated in the growth of urban centers may find themselves with a population with increasing needs for public services, but their voters’ needs could fall victim to the Legislature’s arbitrary cap,” the researchers said.
“Cities whose citizens want a new recreation center or a new library may be quite happy to pay for it but would find there is no room for the new operating costs under the 2% cap.”
Fisher and Swenson predicted that if the bill becomes law, it will force cuts in public services in many cities and counties.
Cities and counties would have to accommodate employee benefits under the 2% cap. But the report said pension contributions for workers covered by IPERS and public safety retirement plans, along with health insurance premiums, have risen faster than 2%.
For example, government employers’ health premiums in the Midwest have increased an average of 3.9% annually for the past 10 years, their report said.
Fisher and Swenson said total property taxes in Iowa have remained about 3.5% of personal income for the past 20 years. But property taxes for cities and counties have been more stable, averaging around 1.9% of personal income.
They said the bill would create an incentive for local government to turn to fees and local option sales taxes, even though those hit lower-income households harder.
A county board of supervisors or city council could propose exceeding the 2% growth limit. But voters could force a special election on the increase by submitting a petition signed by 20% of people who voted in the last presidential election.
“This bill, in other words, substitutes a cumbersome and costly special election for the local democracy embodied in the election of public officials … to make such decisions on our behalf, with our input, and with research and planning,” Fisher and Swenson wrote.
The next time your state representative or state senator shows up for a public forum, convey this clear message to them:
Tell them you prefer to trust the local county supervisors and the city council — people you already elect and see at school events or in the grocery store — to make these budget decisions for you, rather than having the decisions imposed by a group of people meeting in Des Moines for a few months each year.