Iowa property tax plan raises concerns over rental costs

DES MOINES, Iowa (Gray Media Iowa Capitol Bureau) - Iowa lawmakers heard concerns Monday that a plan to change the property tax system could raise costs for renters.

A House subcommittee took up the bill that passed the Senate earlier this month as lawmakers look for final agreement before the legislative session ends.

The bill would reclassify multi-residential buildings like condos, duplexes and apartments from residential into their own separate property tax class. That could increase property taxes for landlords.

It reverses a property tax cut in 2013 that aimed to lower rent for multi-residential buildings.

Logan Murray with the Greater Iowa Apartment Association said the extra costs would be passed on to renters.

“A tax increase of this magnitude would decrease that competitive advantage,” Murray said. “Our analysis shows it would be about a 15% increase just through main operating. So to make the math a little bit easier lets call it $1,000 instead of $971. Your monthly rent would go from $1,000 to $1,150 a month.”

Speakers also criticized the bill’s increase to the state fuel tax. The bill would raise the gas tax over time based on inflation to help local governments make up for revenue loss from property tax caps. Iowa has not increased the tax since 2015.

Tyler Raygor with Americans for Prosperity said Iowans are already spending too much, especially with the current conflict in Iran.

“We’re staring down the barrel of the third highest gas prices in human history and we’re seriously having a conversation about putting the gas tax on autopilot and raising it on Iowans,” Raygor said. “We just don’t think that makes sense now is not the time for it and this bill isn’t the place for it.”

Republican subcommittee members said the bill is a good step in the right direction and want to continue the conversation. Democrat members said the bill does not provide any relief.

Last week House Speaker Pat Grassley said his party is still discussing where they stand on both multiresidential properties and the gas tax.

The bill moved forward to a full committee and a public hearing is scheduled for Tuesday morning.

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Isabella Warren covers state government and politics for Gray Media-owned stations in Iowa. Email her at isabella.warren@kcrg.com; and follow her on Facebook at Isabella Warren TV on X/Twitter@isabellaw_gray, and on Instagram@IsabellaWarrenTV.