Property tax reform, other new laws in effect July 1
Written by Becca Habegger, Multimedia Journalist - bio | email
Businesses along Main Street in Dubuque
DUBUQUE (KWWL) -
After a busy legislative session, many newly-passed Iowa laws became effective Monday.
New laws include requiring background checks in sex offender, child abuse and dependent adult abuse registries for all school employees, prior to employment. The law also requires schools to run a background check on existing employees at least once every five years.
One other new law is what Gov. Terry Branstad is calling the largest property tax cut in Iowa's history. It touches everything from commercial and industrial properties to agricultural and residential properties.
For homeowners, the new law limits valuation growth from its former four percent a year to, now, three percent.
However, one major push for this legislation has been Iowa's relatively high commercial and industrial property tax rates.
Jim Weber is the president and CEO of Weber Paper Company. Between his location in Dubuque and Cedar Falls, he employs some 42 people.
On the two places, he said, he pays a combined total of more than $100,000 a year in property taxes.
"In a small business, it becomes a very major, major expense," Weber said. "Next to our cost of goods and employee wages and benefits, it's obviously the biggest expense we have."
Iowa had been taxing commercial and industrial properties at 100 percent of their taxable values, but the new law has that decreasing five percent in each of the next two years to just 90 percent of taxable value, where it will stay for the 2014 assessments and thereafter.
That means owners of commercial and industrial property in Iowa won't see a reduction until their 2013 taxes come due in the fall of 2014.
Barry Gentry is senior vice president of the Dubuque Area Chamber of Commerce and Tourism, which - with the Iowa Chamber Alliance - fought to get the property tax relief legislation passed, partly in order to attract new businesses to the state.
"We do anticipate growth," Gentry said. "Iowa has not been able to be competitive as far as across the river at other states or other border states, so we knew there had to be a compromise and a reform that made sense for not only business but also for city-municipalities."
In order to make up for the decrease of commercial and industrial property taxes coming into local cities and schools, the state is providing 100 percent backfill to local governments the first four years, then capping that amount thereafter at the year four level.
"I think we need to see what's exactly going to happen," Weber said, aware he won't practically be paying any less until the fall of 2014. "It's like most government programs: the devil is in the details, and we'll see how it's implemented."
One thing is for sure, the new tax rates mean a lot of changes for Iowa's county and city assessors.
Dubuque County assessor Dave Kubik said the changes are going to require an upgrade to his office's software that calculates and processes property taxes.
Properties that hold multi-residential units, such as an apartment building or mobile home park, are also taxed at 100 percent of the taxable value, Kubik said. The new law will reduce those properties' rates over the course of the next 10 years to the same rate as single-family homes, which are currently taxed at approximately 52 percent of their assessed value.
Things will get especially complicated, Kubik said, considering some apartment buildings have retail on the first floor and living spaces in the upper floors. That property's tax rate will be a mix of the commercial rate and the residential rate, he said, adding there will be a "long learning curve" for assessors throughout the state.
The new legislation also provides some property tax credits geared toward smaller businesses.
Other new laws effective July 1 include the creation of a way for Iowa drivers to renew their license online and one that expands the Beginning Farmer Tax Credit.
A new law will increase school districts' funding over the next several years, and another one requires the governor to give his personal approval anytime Medicaid dollars are used to pay for an abortion. The state's Medicaid program covers a small number of abortions each year, either in order to protect a mother's life or in the case of incest, rape or fetal deformity. Iowa is accepting Medicaid expansion dollars offered under President Barack Obama's health care overhaul.
One law helps prevent and control the spread of aquatic invasive species in Iowa's waters.
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