Local officials react to Reynold's address

LEE COUNTY – Iowa Gov. Kim Reynolds made her last appeal to Iowans in the form of her final Condition of the State on Tuesday and local officials are trying to process what was, and wasn’t, proposed by the eight-year governor.
Reynolds focused on several critical issues facing Iowans including cancer rates, veterans' services, economic development, and education, but dedicated a good portion of her speech to property taxes, including a $3 billion reduction in property taxes collected in the state over the next six years.
Part of the reduction includes freezes on homes with owners 65 years old and older and valued at less than $350,000, and capping local government spending at 2% with exceptions for new construction, debt service, and school funding. She also hinted at moving 30% of education SAVE funds to property tax relief by 2030 and limiting Tax Increment Financing deals to 20 years for more narrowly defined projects.
Additional measures under her proposal would include moving assessments to every three years instead of two and moving all appeals back to the assessors' offices to mitigate and taking that away from homeowners.
Lee County Supervisor Chairwoman Ginger Knisley said a lot of the Governor’s proposals need some further vetting considering they were proposals in her speech.
“The local impact of assessing every three years instead of two does offer a small amount of stability for family budgets. However, the extra year allows for more changes in the market and can result in more startling increases when they do occur,” Knisley wrote in an email to Pen City Current Wednesday.
However, she said on the surface and without more details, removing the ability of homeowners to appeal their assessments is “deeply concerning”.
“I have not read the bill in its entirety so I do not know if that is actually what is planned, but it would appear from the press release that we could be facing a way in which individual voices would be muted and I am never in favor of that,” she said.
“Even the most qualified professionals can overlook a crucial detail that leads to an inaccurate valuation. We must have an appeal process. It is my hope that the bill allows for an appeal, and then the burden is more heavily on justifying the increase rather than proving it wrong.”
Supervisor Garry Seyb, the board’s vice chair, added that county assessors already work off formulas that are generated and reviewed by the state.
“The assessors already justify the increases by the formula that is provided to them by the state for making the assessment. So, unless the formula is changing, I’m really unsure what it is that the assessor would be required to do above what they currently do.”
Knisley said the 2% cap would create special challenges for current county structures.
“I have not seen any actual data on that yet. It is below the average rate of inflation. This would not allow us to keep pace and certainly would not allow for any new or innovative projects the citizens may want to see,” she said.
Knisley said she didn’t understand the logic of with the exception for schools.
“I am a fan of Keokuk schools having seen all three of my sons graduate from KCSD, however, if the goal is to lower taxes, then removing schools from the limit on growth makes no sense as the schools represent a larger portion of our property tax bill than any other taxing authority.”
Seyb said he’d prefer a cap set at 3 or 4%, but an exception for new construction allows growing counties to maintain some momentum.
Knisley and Seyb both said the TIF proposals hint at additional oversight but doesn’t do a lot in the way of major changes to TIF programs aside from ending what Seyb called “forever TIFS”.
“My understanding of TIF is that it “sweeps” all new tax growth from a specific area for a specific purpose that should have a defined time frame. I support this completely, but it may cause some concerns for entities that have been “living” on them.” 
Freezing property taxes based on age and value is a slippery slope, Knisley said. She said there could be potential unintended consequences like inflated valuations.
“I also don't think the government has a right to say because one house is worth more than the next, that homeowner has less of a right to stay in their home post-retirement. That does not feel just to me. If we feel it is the right thing to do to make homeownership remain affordable for our seniors then it is the right thing to do. That is not dependent on the value of their home.”
Seyb came up with scenarios that might not work within the age-and-valuation structure.
“Is it simply the home’s assessment and age of owner? What if the $10k trailer is sitting on 100 acres of ground? It’s paid for but arguably the property is worth more than $350k,” he said. “How would farmers who own ground meet the standard set – ever?  A married couple whose age gap is significantly different. If the older spouse passes does the younger spouse still qualify? I could go on.”
Knisley said she was pleased that the governor has proposed setting aside funding to encourage consolidation and collaboration.
“I see a lot of potential there. We have fantastic county employees, and I can see them rise to that challenge. In fact, I see this already within our county,” she said.
“As a property owner I want to see lower property taxes as much as anyone else. As a county supervisor, I lay awake at night trying to solve the equation. We are early in the legislative session and we have three distinct versions of property tax relief legislation already in play. I will be watching the process closely, brainstorming with county staff, and listening to the citizens of Lee County so we can get to work as soon as possible on whatever new framework we are given.”
Seyb said he applauded the efforts across the legislature to address what he said most taxpayers would agree is an issue.
“It is my personal belief that in the end, most the plans I’ve seen shuffle the property tax burden. Arguably, if you make it that some demographic no longer pays property taxes then that places more burden on the rest,” he said.
“Until counties/cities/schools are able to find a different major revenue source I do not see a path to the elimination of property taxes. I do believe as a county we are working hard to address property taxes and have cut our levies by a combined $1.16/thousand over the last two years.”

Fort Madison City Manager Laura Liegois also was approaching the Governor’s proposal with eyes open. Liegois said assessments go up and down as the years flow based on sales prices in the area.
“However, it does not keep the growth of current wages, benefits, and other expenses of city operations each year. A 2% annual cap for cities does not cover the cost that we have no control over,” she said.
But she said keeping new construction and debt service out of the cap is positive news when so many are working to improve communities with economic growth in new business businesses and other opportunities.
She also said there’s some insight into communities shifting the burden of expenses from general fund to debt service to take advantage of spending in the governor’s scenario.
“What will eventually happen is the items that cities use to never borrow for (vehicles and other smaller items) will now go into debt service, which allows for items to still be purchased using general fund operational dollars,” Liegois said.
“That 2% cap does make it challenging for cities with the rising cost of liability insurance, health insurance, and any other issues that arise in the cost of doing business.”