Iowa's commercial property taxes are the third highest in the nation, but that may soon be changing. Lawmakers say property tax reform is their top priority for the legislative session that begins January 14th.
An Enviable Position
Iowa has a record-high $688 million budget surplus from last year. The latest revenue predictions call for the state to take in 3% more in tax money is fiscal year 2013 than in 2012.
That's why lawmakers and Gov. Terry Branstad, who pushed for commercial property tax reforms during both the 2011 and 2012 legislative sessions, believe they can come up with a plan to cut business property taxes this year.
"The good news is with the budget balanced, with the cash reserve and economic emergency account filled, and with revenue exceeding expectations, we're in a financial situation where I think we can assure local governments that we can fully fund tax credits on the books," Branstad said. "And whatever we recommend in terms of reducing the commercial property tax, the state can replace those dollars to local governments."
Making Iowa More Competitive
It's too early to guess just how much commercial property taxes will be cut. However, the main goal is to make Iowa more competitive with other states.
The governor points to the following example: a $25 million Iowa urban commercial business currently pays an average property tax of $1.1 million. In Minnesota, the next most expensive state in the region, the same business would be taxed at less than $875,000. In Chicago, the taxes would be $540,000.
"It's critically important at this time in our state's history that we use the resources that we have in a way that's going to most effectively position us for growth and investments in jobs in the future. I believe reducing the property tax has got to be an important part of that, Branstad said.