Refunds to county and city governments for commercial property tax cuts will be phased out over the next few years as part of the tax plan the Iowa Legislature passed this year.
These refunds otherwise known as “the backfill” was passed as part of a 2013 law and have been treated by local governments like property tax revenue. The payments will phase out over the next four to seven years, depending on the growth of the tax base. Washington County Auditor Dan Widmer says he and the Board of Supervisors haven’t dug into how many dollars lost this will mean for the county, but he and other county officials across the state suspected this was a matter of time, “It doesn’t come as a surprise because there was that feeling or opinion that people suspected that it would be occurring at some point in time, just based on past experience with these types of things that the state is offering. So I can’t really say that it was a big surprise, it was expected to occur at sometime that this backfill would go by the wayside and unfortunately for counties that’s what’s going to happen.”
Washington City Administrator Brent Hinson told KCII that he estimates the end of the backfill will equal to about $100,000 cut from the city’s budget. Other features of the state’s tax plan included a shift of mental health funding from local property taxes to a state appropriation, an elimination of income tax cut triggers that would speed up those cuts originally passed in 2018, and expansion of child tax credits.