Iowa GOP pushes limits on local tax trick

News

April 3rd, 2012 by Ric Hanson

All 15 Republicans in a House committee have approved a bill designed to limit the ability of Iowa cities and counties to create special taxing districts that have been used to finance everything from sewers to swimming pools. Representative Chuck Soderberg, a Republican from Le Mars, says the aim is to get a handle on just how much property tax money is being diverted from general purposes to these special projects. “There needs to be more transparency, more accountability, more auditing,” Soderberg says.

Developers say the districts help cities, because the property taxes in those districts are used to pay off bonds that finance the improvements, like new sewers and roads, that lure businesses to the area. Critics say cities have abused the concept and officials in at least 22 Iowa cities have declared all property in their city as one of these special districts. The bill would no longer let cities use this financing tool to pay for things like swimming pools or hospitals, but it could be used to finance police and fire stations.

Representative Dave Jacoby, of Coralville was one of the 10 Democrats who voted against the bill. “Why is this any of the state’s business in the first place?” Jacoby asked during Monday afternoon’s committee meeting. Others argued the bill would create too many limits on communities, making it impossible to quickly come up with a deal to lure a new business to town or to keep an expanding business from leaving. The issue has flared this year due to a situation in eastern Iowa, as Coralville is trying to lure a department store out of Iowa City, using this particular tax gimmick.

(O. Kay Henderson/Radio Iowa)