Republicans in the Iowa House have proposed doubling the tax benefits for homeowners and military service members in Iowa – changes they concede they’re pursuing without knowing exactly how much they will cost the state treasury.
Two House Ways & Means subcommittees on Wednesday advanced bills that would double the homestead tax credit -- from the first $4,850 in value currently to the first $9,700 under House Study Bill 646, and boost the military service property tax exemption from $1,852 to $3,704 under HSB 647.
The last time the homestead tax credit was amended was in 1980, when it was increased from $4,500 to $4,850, while the military exemption was last adjusted in 1974 from $500 to $1,852, according to the Iowa Department of Revenue. For the current fiscal year, the fully funded homestead credit carries a price tag of more than $131.8 million while the military exemption had a $2.16 million cost to the state general fund, agency officials said.
During Wednesday’s subcommittee meeting on the measure doubling the homestead tax credit, Rep. Jerry Kearns, D-Keokuk, signed the subcommittee report but expressed concern the cost to implement would be “considerable – in the millions, in the hundreds of millions maybe.”
Rep. Quentin Stanerson, R-Center Point, the subcommittee chairman, said a fiscal note has been requested from the Legislative Services Agency to answer “the million-dollar question” on the bill’s cost. “It hasn’t been touched for quite awhile so we’re going to have the conversation on it.”
Rep. Tom Sands, R-Wapello, chairman of the House Ways and Means Committee, said he was uncertain of the proposal’s cost but added “we know if it’s never raised, it will never be any bigger to the homeowner than it is right now. I think it’s something that we realistically want to do. I think whether we can get to doubling it is yet to be seen.”
Sen. Joe Bolkcom, D-Iowa City, chairman of the Senate Ways and Means Committee, said majority Democratic senators would look at the issues if they are approved by the GOP-run House this session.
However, he noted that the split-control Legislature devoted considerable state resources last year to provide tax relief to commercial and industrial property owners and to ensure that local governments would not be negatively impacted by the property tax reductions.“I think there’s concern about the state revenues softening some and our ability to backfill our commitments to local governments,” he said. “We should be cautious in voting out more mandates on local governments. It sounds real good to pass tax cuts to homeowners and veterans. The Legislature hasn’t done a good job historically in actually keeping its promises for those tax credits.”