Gov. Kim Reynolds will introduce property tax proposal during next legislative session

DAVENPORT — Iowa Gov. Kim Reynolds intends to put forward a proposal to change Iowa's property tax code, she said Tuesday after a roundtable discussion in Davenport.

Reynolds met with several Scott County lawmakers and about 30 government, business and school leaders at the Quad Cities Chamber in downtown Davenport to talk taxes.

It's one of several roundtables Reynolds has been holding throughout Iowa as she has pledged to take more of an active role in crafting property tax changes.

The roundtable was closed to the public and press, but Reynolds talked with the Quad-City Times during a media availability afterward.

Reynolds said she believes that "it is the expectation of Iowans that we get something done this year, especially our elderly population."

"That's what we're working on right now," Reynolds said of a proposal on property tax reform from the governor's office. "We're not anywhere close. We're getting there. We put a lot of time in it over the interim. But I think you'll probably see bills from the House, the Senate and the Governor's Office, and then we'll work through the process and see where are there some consistencies, where are some outliers, and ultimately get feedback from Iowans and local government across the state and then figure out what we can afford to do."

After passing into law property tax reforms in 2023 that combined levies and aimed to reduce property tax revenue growth, lawmakers returned to the statehouse in 2025 with a renewed call from voters to further cut tax bills.

No proposal amassed enough support to pass, and lawmakers and the governor have said property tax changes will be the top priority come January 2026 when the legislative session begins.

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Reynolds: Iowans must be open to services ‘delivered differently’

Reynolds said the state must strike a balance between providing quality services Iowans expect and reducing the burden on property tax payers, especially people on fixed incomes.

She said she's holding roundtables to gather feedback and ensure proposed legislation doesn't hamper economic growth, and ensure “we continue to have a good focus on safety in our communities.“

“Iowans are going to play a role in this decision as well,” Reynolds said. “You'll have to be open to having your services maybe delivered differently. Looking at ways that you access some of those services. How can we collaborate with other counties? How can we collaborate within the county, within the cities?”

Reynolds said Scott County, Davenport and Bettendorf are examples of collaboration. Other communities, too, are already looking to collaborate on services, she said, because it is getting harder to increase taxes.

"If you want everything to stay the same, then it's probably going to be very hard to reduce your property tax burden," Reynolds said. "Is there ways that we can provide centers of service? Is there a way … two or three or four counties (can) work together more collaboratively when it comes to EMS? Is there ways that we can utilize our hospitals in rural Iowa more efficiently than we are right now with public health services?“

Reynolds gave another example, emphasizing that these are only questions, not part of proposals.

"Do we need a huge fire station in every single town? Or do we have a main fire station and have some pumper trucks out in some of the other areas instead of every single community trying to fund that new firetruck? And how do we encourage volunteers to still continue to be a part of it and how do we make sure that we can adequately take care of a home that has a fire?" Reynolds said. "So those are all the things that we have to take into consideration. But if you're a small community and you don't want to change any of that, then it's going to be really hard for your property taxes to be reduced. That's why it's hard."

Reynolds said Iowans should contact their lawmakers with their thoughts and concerns and "be willing to think differently on how we could provide some of those services."

Governor leery of eliminating Iowa’s rollback

A proposal introduced in the Iowa House last year would have done away with the state's rollback in favor of a $50,000 property tax exemption for every household and capped revenue growth by 2 percent.

Reynolds said she wouldn't rule out eliminating the rollback, but that at the moment she is leery of proposing it.

Staffers in the Department of Management have told Reynolds that the rollback is "actually the one thing we got right because if you look at a five-year average, it's consistent," she said.

"I just want to make sure that it doesn't inadvertently raise property taxes, on especially residential property taxes," Reynolds said. "If it does that even for a couple years, that's just not something that I would be willing to support."

It's challenging to get per-parcel data, Reynolds said, because of antiquated systems, but her office wants to understand what the final number looks like and its ultimate impacts.

"If we can figure out a way to figure out what that magic number is and what those credits look like that doesn't have unintended consequences … It's not off the table, we've just got to take a look at it."

Review includes examination of tax increment financing

Tax increment financing districts, or TIF, came up in Tuesday's meeting, Reynolds said. TIF is an economic development tool governments use to incentivize developers to build in certain areas by diverting property taxes on increases in property values to rebates or improvements in the district, such as infrastructure.

One change the governor's office is looking at is a 20-year sunset for TIF agreements.

"I don't think that's unreasonable," Reynolds said. "I don't think they should have it available forever. I think after 20 years, if they want to continue to do another project, then they should go back to the table and make that case to property tax payers."

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State Sen. Kerry Gruenhagen, R-Walcott, who is on the Ways and Means Committee, said he expects the state Senate to introduce its own bill on property tax reform. He declined to specify details, but said he expects some changes from last year's Senate proposal.

"It's important to maintain services as well as help those on a fixed income stay in their home," Gruenhagen said, adding that inflation has hit both governments and residents.

Local government officials have expressed concern about the proposal to limit growth to 2 percent, which officials say would not keep up with raises promised in collective bargaining contracts with police, fire, and public works employees, which make up the bulk of many municipalities' budgets.