(Des Moines, IA) -- An error in the formula that calculates property tax rates in Iowa could cost property owners hundreds of dollars or more in taxes if the mistake goes unfixed.
A 2021 law failed to change the formula after altering the way multi-residential properties like apartment buildings and nursing homes are taxed.
"The consequence is residential property owners, as is in our code right now, will be paying a penalty, or effectively, a potential property tax increase," said Sen. Dan Dawson, R-Pottawattamie.
SSB 1056 is the Senate's attempt to correct the error. Amendments to the bill would also:
- Give auditors, assessors 15 days to get out new budget numbers
- Extend the budgeting deadline to April 15 for cities, counties
- Stop entities from collecting retirement income
- Prevent child care tax credit misuse
Several city officials believe the April 15 deadline is still too quick of a turnaround.
"What we're asking for is a delay for a year to be able to do this," said Dubuque Mayor Brad Cavanagh. "I really don't think we can do this as a city, and that other cities, small and large throughout Iowa, can pull this off in a 15 to 30 day window."
Former Iowa representative and current president of the Iowa Taxpayer Association Tom Sands said the state legislature is in a tricky spot.
"You're in an unfortunate situation because if you do no action, it will be an automatic tax increase for residential property taxpayers," said Sands. "However, the timing of the bill, obviously, with local government budgeting, is somewhat problematic. So, the question that lies before you is: Do you correct the mistake or not?"
SSB 1056 will be considered by the Senate Ways and Means Committee after passing through subcommittee Monday.