Fiscal Note
Fiscal Services Division
SF 132 – Wastewater Infrastructure, Taxation (LSB1203SS)
Staff Contact: Jeff Robinson (515.281.4614) jeff.robinson@legis.iowa.gov
Fiscal Note Version – New
Description
Senate File 132 establishes a new property tax exemption for property owned or operated by a
public utility as defined in Iowa Code section 476.1(3)(d) where the property is used to furnish
sanitary or storm water drainage for compensation through a piped collection system. The
change applies to assessment year (AY) 2024 and after.
Background
The Department of Revenue reports that a private, rate-regulated water utility company recently
purchased an existing municipal wastewater system. As a municipal system, the property
involved was exempt from property tax. As a system owned by a private company, the property
is subject to property tax. With acquisition occurring after January 1, 2022, but before
January 1, 2023, the system would first become taxable for AY 2023 under current law and
under the Bill.
Assumptions
• The wastewater system situation described above is assumed to be the only property fitting
the exemption requirements specified in the Bill at this time.
• The assessed value of the wastewater property is not known. The purchase price of the
property was $2.0 million. This purchase price is used as the assessed value for property
tax fiscal impact calculations.
• The exemption first applies to property taxes due for AY 2024 (taxes due in the fall of 2025
and the spring of 2026).
• The consolidated property tax rate for the particular property is assumed to equal $33.85 per
$1,000 of taxed value. The State basic school levy equals $5.40 of the $33.85 consolidated
rate.
Fiscal Impact
Creating a new property tax exemption for a privately owned wastewater system will reduce the
annual property taxes owed by an estimated $68,000, beginning with FY 2026. The reduction in
taxes owed will increase the State standing General Fund appropriation for school aid by an
estimated $11,000 and reduce local government property tax revenue by an estimated $57,000.
The provisions of Iowa Code section 25B.7 (State funding of property tax credits and
exemptions) may require that the State fully fund the $57,000 reduction in local property tax
revenue that results from this new property tax exemption.
The property tax exemption will also apply to any future acquisitions of existing wastewater
facilities by privately owned public wastewater utility companies.
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Sources
Department of Revenue
Department of Management property tax rate files
Legislative Services Agency analysis
/s/ Jennifer Acton
February 16, 2023
Doc ID 1368995
The fiscal note for this Bill was prepared pursuant to Joint Rule 17 and the Iowa Code. Data used in developing this
fiscal note is available from the Fiscal Services Division of the Legislative Services Agency upon request.
www.legis.iowa.gov
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Statutes affected:
Introduced: 427.1