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Ending the ‘blame game’


Taxpayers should have a clear idea of how their property taxes are calculated, and understand who’s responsible when those taxes increase, says state Rep. Jim Kurtenbach of Nevada.

Earlier this year, Kurtenbach, a business professor at Iowa State University, together with Rep. Kent Kramer, a financial planner from Johnston, co-sponsored House File 692. The enacted legislation authorizes a complete rewrite of the property tax system.

Last month, an implementation committee that includes representatives from the cities, counties and other affected groups began meeting, with the goal of drafting legislation to bring to the 2005 Legislature. Next summer, four counties – Cerro Gordo, Dickinson, Woodbury and Warren – will run twin sets of books to compare the new system to the existing system.

“Under the current system, the assessor, who is a non-elected official, is seen as driving tax increases,” said Kurtenbach, who co-chairs the Property Tax Implementation Committee. “It’s what I’ve referred to as the ‘Iowa Blame Game.’ The taxpayer literally doesn’t know who to blame for his taxes going up.”

The legislation was introduced by the two freshmen legislators in part as a response to a challenge Gov. Tom Vilsack made to the Legislature in his Condition of the State address earlier this year.

Making the new system as fair as possible will be the greatest challenge, say administrators at the county and state levels. One of the legislation’s key directives is that the new system must not result in a shift in tax burden among any of the classes of taxed property: residential, commercial, industrial, agricultural and utilities.

Currently, all properties are assessed in each odd-numbered year, and an equalization process is applied in an effort to make tax rates equitable throughout the state. A rollback is applied to limit the increase in property valuations to no more than 4 percent per year.

The proposed system would establish 2005 valuation as the base year for each property’s value, and use that year’s assessment as the property’s value for tax purposes until it is sold or expanded. A property built or purchased after 2005 will have an inflation factor applied to the fair market value to bring it back to a 2005 value.

Rather than expressing tax rates in mills, or $1 dollar of tax per $1,000 of assessed value, they will be expressed in terms of “square footage of value,” calculated by dividing the assessed value by the building’s square footage. Kurtenbach said the square footage of value calculation is being proposed as a more understandable measure than the current millage system.

A separate land tax is also being considered.

With the current system, assessments are driving the tax, he said. Under the new system, fair market value will drive the tax.

“When the assessments are not constantly changing, it forces the local governments to focus on the tax rates,” Kurtenbach said. “An elected official under that system must take a vote and decide to raise taxes.”

Dale Hyman, Polk County’s chief deputy assessor, said he’s concerned the new system could be regressive; shifting taxes from higher-valued properties to lower-valued properties.

“In Polk County, our high-valued properties tend to go up quite a bit more quickly than lower-valued properties,” he said. “If you don’t do it carefully, you may adjust back your higher-valued properties more than you do properties in the lower-valued neighborhoods.”

Additionally, remodeling existing space in a home will result in increased value that’s not being taxed, Hyman said. And it’s the more expensive homes that tend to be remodeled, meaning possibly a further regressive effect from the tax, he said.

From another perspective, the proposed system would not penalize homeowners by taxing them on unrealized gains as their homes’ assessed values increase, said Jay Syverson, a fiscal analyst with the Iowa State Association of Counties.

“Probably the most important (change) is to make it easier for people to understand, so it’s not so much of a bear of a subject,” he said. “But that’s also the hardest thing, because easy and fair don’t always go together.”


The committee that’s been formed to implement House File 692 will do more than create a new property tax system. It’s also charged with examining what property taxes pay for now, and whether those uses should be modified, said state Rep. Jim Kurtenbach of Nevada.

“It’s an extremely complicated topic, and it’s become that way through years and years of piecemeal legislation,” he said. “And I still believe that the only way we can create a system that’s fair, equitable, simpler and less costly to administer is to start with a blank sheet of paper and try to build up a property tax system that everyone can understand.”

The overall goal is to create a system that will be viewed as “fair, equitable and understood by all,” he said.   “I don’t look at it as agricultural competing with commercial competing with residential (classes of property). I look at it as being fair for all taxpayers.”   Having an implementation committee forces lawmakers to move the issue, which has been studied numerous times, forward into action.

“What I hope people understand is that we’re trying to move slowly, cautiously,” Kurtenbach said, “but at the same time, hold the Legislature accountable for changing the system.”

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