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Iowa considers fees to provide property tax relief

Iowa's Des Moines Register (5/8, Clayworth) reported that the Iowa state Legislature "likely will consider allowing local governments to substitute certain types of fees for property taxes" in a review next year of "one idea for property tax relief," which provided "more choices for local governments." 

The Register notes that Iowa's property tax system has long been criticized as complicated and unfair. The state is about to complete a two-year legislative study of the issue. The idea to raise fees for property tax relief gained prominence four years ago when Des Moines took the first step to increase a "franchise fee" on gas and electricity bills. 

In Des Moines roughly 40 percent of all property is owned by government or nonprofit organizations and thus exempted from the property tax. On the contrary, virtually all utility users pay the franchise fee, which city leaders have long argued is more fair. The fee increase however is facing a legal challenge after a resident sued the city, calling the fee an illegal tax-- because the city treated much of the money collected by the higher gas and electric as a general revenue "to lower tax rates, hire more police officers and extend library hours."

[In an earlier legal case about user fees in Michigan, Bolt vs. City of Lansing, the court ruled that a stormwater charge were instead a tax and, therefore, unconstitutional.]

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Hubert H. Humphrey Institute of Public Affairs