State lawmakers debate commercial property tax reform - KWWL - Eastern Iowa Breaking News, Weather, Closings

State lawmakers debate commercial property tax reform

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CEDAR FALLS (KWWL) -

Lawmakers are working on a temporary spending bill to keep the state running until a long-term budget is passed. That would give the governor time to read through a final bill.

Legislators say there are two hot issues holding up an agreement, money for schools, and property tax reform.

According to the Iowa Association of Business and Industry, property taxes have grown 65% in the past ten years. This year, both Republicans and Democrats are agreeing they'd like to reduce the tax burden on small business owners. But that's about where the similarity ends.

Take the Cedar Falls Main Street for example. On a nice afternoon, the area is buzzing with activity. That's due, in part, to a community effort which revitalized the downtown. But recently, the folks who own these properties learned, there's a price to pay for the improvements.

"Having a successful main street is something we've worked hard for for many years. And now it's as if we're being punished all of a sudden. I know there's property owners down here that their property taxes went up 400%," said business owner Darin Beck. "Most of mine have doubled just from last year to this year."

Commercial property taxes in Iowa are rising year after year, ranking the state in the top ten for highest property tax levies. Local economic development directors believe the high tax rate prevents some businesses from locating in Iowa.

"When we lost our headquarters in the flood, we seriously thought about whether we should keep it here or move out of state. And we had options we considered in states that had a 0% property tax," Beck said.

Lawmakers aren't talking 0%, but Democrats are proposing a deal which, they claim, trims commercial property taxes by $200 million. Their plan would create property tax credits for small business owners.

On the other hand, Republican House members are calling for an overall commercial property tax reduction of 25%. They claim it would cut taxes by nearly $350 million.

Back on Main Street, Cedar Falls store owners continue to welcome the business boom. But as sales go up, they're looking to lawmakers to reach a compromise and push property taxes down.

"I'm glad to see both sides at least at the table talking about the issue. Because that's a first in a long time," Beck noted.

Lawmakers have until Thursday to either pass a budget, or pass a stop-gap spending bill. Without a compromise, they may end up back in Des Moines for a special session. The new fiscal year begins Friday, July 1, 2011.

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