Governor, Legislators Remain Split On Property Tax Reform Proposals

The overhaul of Iowa’s property tax system that Gov. Kim Reynolds (R) and state legislators have been discussing for months may or may not happen in 2026.

That was the message conveyed by State Sen. Mark Costello (R) and State Rep. David Sieck (R) during Saturday’s legislative forum at Glenwood City Hall.

The governor, House Of Representatives and Senate have each been touting their own property tax proposals since January, but with the legislative session now past the halfway point, time is running out to reach consensus

Costello said the governor’s plan is closer aligned to the property tax bill introduced in the House than a bill proposed in the Senate.

One of the major differences is a proposed 2% revenue growth for cities and counties Reynolds and the House bill favor. The Senate bill would be more flexible on revenue growth, factoring in inflation.

Other highlights of the Senate bill include the lowering of school tax rates and voter-approved levies and shifting more public education costs from school districts to the state. The bill would also shift the state’s homestead credit and state reimbursement to local governments and provide full tax exemption to homeowners at least 60 years old who don’t have a mortgage.

The House bill would make changes to voter-approved levies and provide a $25,000 tax exemption except for taxes imposed by local school districts.

“Everybody has their own little niche carved out and they don’t want to give it up,” said. Sieck. “That’s the battle we’re facing right now.”

Overhauling the property tax system isn’t an easy process, Sieck noted.

“You’re taking 150 years of bills that tell you how to do property taxes and trying to unwind the whole thing and making it more coherent that’s easier and less tax intensive,” he said.

In addition to property taxes, Costello said healthcare and Medicaid have been issues of importance in the Senate.

“Working on healthcare stuff, trying to understand the governor’s plans with this new Medicaid director on saving some money in Medicaid and procuring the pharmacy benefits in a different way,” he said. “We did have the federal government lower their match on Medicaid so we have about $200 million, give or take $10 million, that we’re going to have to spend more this year than last year, which we’ve known and we’ve been saving that money each year when we’ve had extra.”

Sieck said between 1,500-2,000  bills have been introduced in the House this year, which has slowed the legislative process.

“That’s way too many bills,” he said. “We need to do a better job of screening them because a lot of them don’t have much of a chance of going anywhere. We spend a lot of time with our legislative people writing these bills.”

Costello and Sieck spent the majority of the forum answering questions and addressing concerns from audience members. Some of those issues include a bill that addresses taxpayer funds local cities, counties and school districts are investing in out-of-state trust funds, water quality issues in Iowa and a push to sever alliances between schools and their local public libraries.

Saturday’s forum was hosted by the Mills County Chamber of Commerce.