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Senate passes property tax relief for Iowans

We passed SF 587 to address two major concerns for Iowans — property tax relief and mental health funding.

It provides over $100 million in property tax relief for Iowans by eliminating property tax levies and removing the trigger put in place in the 2018 tax bill.

Additionally, it provides $60 million in state funding for mental health in Iowa in the first year, $125 million in the second and sets up sustainable, predictable funding growth for the future.

When we get feedback on this bill we mainly hear about two issues — the phasing out of the backfill and the elimination of the Public Education and Recreation Tax Levy (PERL).

The backfill was originally created in 2013 to bridge a revenue gap created by corporate property tax relief. Since then, revenues to cities and counties have grown significantly in many areas of the state and the backfill has achieved its goal of covering lost revenue to cities and counties. Under this bill, the backfill to cities and counties would be phased out on either a four- or six-year schedule, depending on how they grew relative to the rest of the state.

PERL was used by schools for things such as new playground equipment, before and after school programs, and summer school programs. However, money can also be used for the same purposes under the Secure an Advanced Vision for Education (SAVE) program. Since the legislature extended the 1-cent sales tax for SAVE in 2019, PERL has become duplicative and unnecessary. Furthermore, eliminating levies is another way to ensure continued tax relief moving forward because as property assessments inevitably rise, the increases are less significant since property taxes are due on fewer levies.

Bold reforms have long been a priority in the Senate and this bill continues to implement those types of reforms. It increases state funding for mental health services, simplifies the tax code, provides more certainty for Iowa families and small businesses, implements real property tax relief and makes owning a home in Iowa more attainable for new homeowners and for seniors facing rising property assessments.

State Sen. Tim Kraayenbrink, R-Fort Dodge, represents Senate District 5.

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