Property Taxpayers Beware! – Education Bill Watch

House File 2001 – Expands Levy Authority By Up to $380 million
This bill – cosponsored by key Democrats including the Chair of the House Education Committee and the Speaker of the Iowa House – allows Iowa school districts to shift up to $380 million in heath insurance and benefits onto property taxes.

Under current law health benefits for current school employees must be paid for from the district’s general fund budget. HF 2001 allows districts to shift that cost onto property taxes.

Potential Property Tax Impact: $380 million

House File 2040 – Property Taxes Can be Used for Any General Fund Purpose
This bill allows districts to use the board approved portion of the Physical Plant and Equipment Property Tax Levy (PPEL) for any General Fund purpose. The bill specifies that districts may do this for the FY11 and FY12 school year. The bill opens any board-approved PPEL dollars generated in that fiscal year and any like unspent dollars to any general fund purpose.

There are three potential far reaching implications for this temporary “help”.

  1. HF 2040 trumps an elected local school board’s vote to levy property taxes for school infrastructure related purpose.
  2. HF 2040 could create an incentive to levy. Not every district has a board-approved PPEL levy. Opening up the use could prompt those school boards to initiate a new levy to supplement their general fund.
  3. HF 2040 raises questions about the SILO/state sales tax. Under Iowa law SILO/state sales tax proceeds can be used for any PPEL purpose proceeds Questions are being asked whether districts can deposit SILO proceeds into the PPEL fund.. Hopefully this language can’t be interpreted as opening the SILO/sales tax for any general fund purpose.

Potential Property Tax Increase: Unknown.

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