Iowa Property Tax Increase Slows Down

Iowa Property Tax Increase Slows Down

For fiscal year 2012, Iowa's property taxes are projected to increase 3.4% from fiscal 2011. That would be the smallest increase in more than a decade.

The total Iowa property tax bill for fiscal 2012 is projected to increase 3.4% from fiscal 2011. If that forecast pans out, it will be the smallest increase in more than a decade. That's according to data released in early August by the Iowa Department of Management.

The 3.4% property tax increase in fiscal 2012 is down from a 5.9% increase in fiscal 2011 and a 5% increase in fiscal 2010. The state's property tax bill for the current fiscal year will be $4.6 billion, an increase of $154 million from the total in fiscal 2011.

The smaller increase in property taxes is a signal that the state is doing a better job of keeping its commitments to fund Iowa's school districts and local governments, says Don Petersen, director of government relations for the Iowa Farm Bureau. In the past four years, school districts and local government have been pressured to raise property taxes, partly because the state has not fulfilled its commitments.

Push for state government to keep its budget promises

Farm Bureau has been pushing for the state to provide its promised share of costs for school districts and local government to east the pressure on property taxpayers. "The state kept its budget promises this year, and that was certainly a factor in the smaller property tax increases we are seeing," says Petersen.

Iowa's taxable valuation rose higher than the percentage tax increase for the first time in more than a decade. That means the average levy rate decreased, when figured statewide.

The Iowa Department of Management data shows that the property tax bill for Iowa's school districts is up 3.2% for fiscal 2012, the lowest percentage increase in six years. In contrast, the fiscal 2011 property tax bill for Iowa schools rose 7.8% over fiscal 2010, the largest percentage increase in 30 years.

The total property tax bill for Iowa K through 12 schools in fiscal 2012 will be just under $2 billion, or about 43% of the property tax total.

The Iowa Department of Management report also shows smaller increases to fund local government in fiscal 2012. County property taxes will rise 3.6% to $1 billion, the smallest increase in seven years. Property taxes for cities will rise 3.4% to $1.3 billion, the smallest increase in more than a decade.

Agricultural property taxes are expected to rise 3.3%

The data shows that property taxes on agricultural land and buildings for fiscal 2012 will rise 3.3% to $696 million. In fiscal 2011, property taxes on agricultural land rose 6.1% in Iowa.

Property taxes also increased for residential and commercial property in the current fiscal year. Residential is up 5.1% to $2.3 billion and commercial up 1.1% to $1.5 billion.

Iowa farmland assessments have increased sharply in the past several years because of increases in the state's productivity formula, which takes into account crop production by county, as well as expenses. However, those higher assessments don't automatically translate into higher taxes because of the state of Iowa's rollback formula. That formula means the assessments on a class of property across the entire state cannot increase by more than 4% in a single year.

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