Fiscal Note
Fiscal Services Division
HF 718 – Property Tax, Assessments, and Bond Elections (LSB1284HV.2)
Staff Contact: Jeff Robinson (515.281.4614) jeff.robinson@legis.iowa.gov
Fiscal Note Version – Final Action
Summary
House File 718 is composed of 14 divisions related to taxation, fees, and local government
budgeting, including:
• Division I creates new limits on county property tax rates.
• Division II creates new limits on city property tax rates.
• Division III repeals the Public Education and Recreation Tax Levy (PERL).
• Division IV strikes a county sheriff fee report.
• Division V creates a new homestead exemption for homeowners aged 65 and over.
• Division VI increases the Military Property Tax Exemption and eliminates the State General
Fund reimbursement to local governments that finances a portion of the exemption.
• Division VII places restrictions on new commercial and residential property tax abatements
within the Urban Revitalization program.
• Division VIII relates to funding for city of Des Moines transit programs.
• Division IX relates to annual county property tax value reports.
• Division X relates to city, county, and school district budgets. The Division also requires
that county auditors mail individual statements to each property owner or taxpayer.
• Division XI creates a new fee for driver’s license and identification cards issued to persons
who are not residents of, or do not own property within, the issuing county.
• Division XII relates to county writing fees.
• Division XIII relates to bond elections.
• Division XIV relates to county and city debt authority.
Note on Property Tax Rates
All property tax rates used in this document are reflected as rates that are applied per $1,000 of
taxed property value. Taxed property value is the value determined through the assessment
process, adjusted (reduced) for any rollback for the property class, and after property tax
exemptions have been applied.
Division I — County Levy Rates
Division I Background
Iowa Code chapter 331 (County Home Rule) provides the authority for counties to tax real
property, with additional authority provided in Iowa Code chapter 422D (Optional Taxes for
Emergency Medical Services) and Iowa Code chapter 28E (Joint Exercise of Governmental
Powers). Certain county tax levies apply to all taxed property within the county (general levies),
while other levies apply only to property that is outside of incorporated cities (rural levies).
Properties located in cities are only subject to the general levies, while rural properties are
subject to both general and rural levies.
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Current law authority for county general levies includes:
• Iowa Code section 331.423(1) — The authority for general services is limited to a maximum
of $3.50.
• Iowa Code section 331.426 — The authority for additions to the $3.50 general county
services levy is unlimited, but use of the additional levy requires a finding of one or more of
the following seven circumstances:
• An unusual increase in population.
• A natural disaster or other emergency.
• Unusual problems related to major new functions required by State law.
• Unusual staffing problems.
• Unusual financing required to permit the continuance of a program that provides
substantial benefit to county residents.
• An unusual need for a new program that provides substantial benefit to county residents.
• A reduced or unusually low growth rate in the county property tax base.
• Iowa Code section 331.424(1) — If the general services levy and additions are not sufficient,
supplemental general services levies are allowed for any of nine enumerated services,
including:
• Charges the county is required to pay by statute for inpatient and outpatient substance
abuse and for certain persons attending special schools and hospitals.
• Court-ordered foster care.
• Elections and voter registration.
• Employee benefits.
• Tort liability and other insurance.
• Maintenance and operations of courts.
• Court-ordered costs associated with domestic relations conciliation.
• A joint county indigent defense fund pursuant to an agreement with one or more other
counties.
• Maintenance and operation of an emergency management agency.
• Iowa Code section 331.424B — A general levy of up to $0.0675 is available for the repair
and maintenance of cemeteries.
• 2019 Iowa Code section 331.424A(6) — A former (repealed) general levy used to fund the
County Mental Health and Disabilities Services Fund. Funding for this function is now
provided through a State General Fund appropriation.
• Iowa Code section 331.422(3) — A general levy for debt service payments.
• Iowa Code section 422D.5 — A general levy of up to $0.75 for emergency medical services
(voter-approved).
Current law authority for county rural services levies includes:
• Iowa Code section 331.423(2) — The authority for the rural services levy is limited to a
maximum of $3.95.
• Iowa Code section 331.426 — The authority for additions to the $3.95 rural services levy is
unlimited, but use of the additional levy requires a finding of one or more of seven unusual
circumstances listed above as additions to the general services levy.
• Iowa Code section 331.424(2) — If the rural services levy and additions are not sufficient,
supplemental rural services levies are allowed for two enumerated services, including:
• Employee benefits associated with rural services employees.
• An aviation authority.
• Iowa Code section 28E.22 — If approved by voters, a levy of up to $1.50 is available for the
purposes of a 28E agreement related to unified law enforcement.
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In addition to the above general and rural levies, Iowa Code section 331.425 allows
voter-approved additions to levies otherwise specified.
Figure 1 provides a breakdown of the total revenue raised and the number of counties utilizing
the property tax levies available to counties. Information is provided for FY 2017 and FY 2023.
From FY 2017 through FY 2023, the statewide average total countywide levy for all purposes
decreased from $6.35 to $5.94, and the average rural levy for all rural purposes decreased from
$3.36 to $3.22. During the period, two law changes occurred that directly impacted the revenue
portion of county budgets. Funding for the County Mental Health and Disabilities Services Fund
was transferred to the State General Fund, and the State General Fund appropriation to
counties to backfill the property tax reduction that was the result of a 10.00% decrease in the
taxable value of commercial and industrial property began a phaseout period.
Figure 1
County Property Tax Levies — FY 2017 and FY 2023
Dollars in millions
Number Number
Levy FY 2017 of Counties FY 2023 of Counties
General Services Levy $ 532.7 99 $ 682.9 99
General Services Levy Additions 13.3 26 20.7 30
General Services Supplemental 258.4 95 355.3 93
Cemetery 0.3 20 0.3 19
Mental Health/Disabilities Services 87.9 97 0.0 0
Emergency Medical Services 0.0 0 0.6 1
Debt Service 82.3 61 116.3 74
Total General $ 974.9 $ 1,176.1
Rural Services Levy $ 205.0 99 $ 253.4 99
Rural Services Levy Additions 1.1 5 0.9 3
Rural Services Supplemental 2.7 9 3.1 8
Unified Law Enforcement 0.5 1 0.5 1
Total Rural $ 209.3 $ 257.9
Total General and Rural $ 1,184.2 $ 1,434.0
Division I Description
The Bill makes the following changes:
• Consolidates several county functions that are currently financed through a combination of
general county services, rural county services, and additions to general/rural county
services levies. The consolidation first occurs for FY 2025.
• Repeals the authority for additions to county basic levies (Iowa Code section 331.426).
• Creates additional limits on the maximum allowed general and rural county services tax
rates. The new limits apply to FY 2025 through FY 2028 and will be specific to each county.
• Establishes maximum general county and rural county services rates for FY 2029 and after
that will apply to all counties. The maximum rates for FY 2029 and after are $3.50 for
general county services and $3.95 for rural county services.
• Restricts the use of voter approved additions allowed under Iowa Code section 331.425 to
the general services and rural services levies.
• Removes “(a)ny other purpose which is necessary for the operation of the county or the
health and welfare of its citizens” from the definition of the term “general county purpose” as
that term is used in Iowa Code chapter 331, part 2 (County Levies, Funds, Budgets, and
Expenditures).
The new county-specific general services tax rate limits for FY 2025 are based on rates in place
for FY 2024, including the consolidation within the general or rural services levies of any Iowa
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Code section 331.426 levies utilized by the county during FY 2024. For four fiscal years
(FY 2025 through FY 2028), maximum county-specific tax rates are based on growth in county
taxed value and county tax rates. For FY 2025 though FY 2028, the application of new county
general service levy limits will fall into one of three categories depending on the situation in each
county each year:
• Category 1 — Counties with general services tax base growth that exceeds 3.00% but is
less than 6.00%: A county in this category will have its maximum property tax dollars
reduced by 2.00 percentage points for the budget year through a reduction in the maximum
tax rate.
• Category 2 — Counties with general services tax base growth that equals or exceeds
6.00%: A county in this category will have its maximum property tax dollars reduced by 3.00
percentage points for the budget year through a reduction in the maximum tax rate.
• Category 3 — Counties with general services budget year tax base growth of 3.00% or
less: Counties in this category will be able to utilize all growth in the property tax base, and
if the county’s current-year rate is below $3.50, the county may raise the budget year
general services rate to $3.50.
For FY 2029 and after, the maximum county general services rate for all counties is limited to
$3.50.
Rural county services tax rates are limited in the same manner as discussed above, but the limit
is based on the rate of growth in a county’s rural tax base and the current year’s rural county
services tax rate, with references to the $3.50 tax rate changed to $3.95.
For FY 2025 through FY 2028, individual counties may and often will fall into a different
category depending on their budget year tax base growth and current year tax rate. Regardless
of the category a particular county occupied in a previous year, its maximum general or rural
services tax rate returns to at least $3.50/$3.95 if the county’s applicable tax base growth does
not exceed 3.00% for a year. At any time, a county may establish a tax rate below the
calculated maximum. However, doing so for FY 2025 through FY 2027 will reduce the county’s
maximum tax rate if the county does not fall within category 3 the following year.
Division I Assumptions and Fiscal Impact
General and Rural County Services
Actual statewide general county services tax base growth between FY 2017 and FY 2023
exceeded 3.00% for each of the six years, but did not exceed 6.00% for a year over the period.
The average of the six annual statewide tax base growth rates was 4.3%. All 99 counties
experienced general services tax base growth above 3.00% for at least one of the six years and
70 counties experienced tax base growth in excess of 6.00%.
The FY 2023 statewide average general county services rate is just above $3.50 at $3.55, and
general county services levies in 30 counties exceed $3.50 (see the top portion of Figure 2).
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 Figure 2
FY 2023 General County Services Basic Levy in Excess of $3.50
In dollars per $1,000 of taxed value
County Rate County Rate County Rate
Allamakee $ 0.35 Guthrie $ 0.50 Lucas $ 0.57
Appanoose 1.30 Hamilton 0.45 Pottawattamie 0.19
Clarke 1.25 Hardin 1.50 Ringgold 1.00
Clayton 0.58 Henry 1.33 Washington 0.60
Clinton 0.65 Humboldt 0.60 Wayne 0.54
Davis 1.43 Jasper 0.95 Winnebago 0.85
Decatur 3.09 Jefferson 0.21 Winneshiek 0.78
Emmet 0.30 Jones 0.15 Woodbury 0.28
Fremont 0.25 Keokuk 0.30 Worth 0.75
Greene 0.20 Louisa 0.91 Wright 0.70
FY 2023 Rural County Services Basic Levy in Excess of $3.95
In dollars per $1,000 of taxed value
County Rate County Rate County Rate
Audubon $ 1.41 Winnebago $ 0.44 Wayne $ 0.17
Actual statewide rural services tax base growth between FY 2017 and FY 2023 exceeded
3.00% for each of the six years, but did not exceed 6.00% for any year over the period. The
average of the six annual statewide tax base growth rates was 4.2%. All 99 counties
experienced rural services tax base growth above 3.00% for at least one of the six years and 78
counties experienced tax base growth in excess of 6.00%.
The FY 2023 statewide average rural services rate is well below $3.95 at $3.18. The three
counties with an FY 2023 rural services rate exceeding $3.95 and the levy amounts above
$3.95 are listed in the bottom portion of Figure 2.
For four fiscal years, the new county-specific rate limits will reduce the maximum allowed
general and rural county services tax rates in any county where tax base growth exceeds 3.00%
for one or more of the four years. For counties with a general or rural county services tax base
that grows more than 3.00%, the maximum tax rate for the next year is lowered by either two or
three percentage points, with counties experiencing tax base growth in excess of 6.00% subject
to the three-percentage point rate reduction.
The fiscal impact of the county tax rate restrictions will reduce statewide property taxes paid for
county services and property tax revenue received by counties. The magnitude of the fiscal
impact is not projectable as the impact on property taxes will depend on the FY 2025 through
FY 2028 growth in the general tax base and rural tax base of the individual counties. While the
most observable impact will be in the general services levies of the 30 counties currently above
$3.50 and the rural services levies of three counties currently above $3.95 (Figure 2), there will
also be a projected tax reduction in any county where the tax base grows by more than 3.00%
for any of the FY 2025 through FY 2028 period.
The property tax reduction fiscal impact will continue for FY 2029 and future years when all
counties will be subject to a maximum general services tax rate of $3.50 and a maximum rural
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services tax rate of $3.95. While the two maximum rates are what is allowed under current law,
authority under Iowa Code section 331.426 for additions to the general levies will no longer be
available to counties. For FY 2023, a total of 32 counties utilized additions to the general
services, rural services, or both levies and the total additional property tax raised $21.6 million.
Division II — City Levy Rates
Division II Background
Iowa Code chapter 384 (City Finance) provides the authority for cities to tax real property with
additional authority provided in Iowa Code section 357G.8 (City Emergency Medical Services
Districts) and chapter 24 (Local Budgets). City tax levies apply to taxable property located
within the boundary limits of the city, although in limited cases, particular classes of property are
excluded from the levy.
Current law authority for city general fund purposes includes:
• Iowa Code section 384.1 — The authority for the general fund levy is limited to a maximum
of $8.10. That maximum rate applies to all classes of property, with the exception of
property classified as agricultural. The tax rate that applies to agricultural property is limited
to $3.00375.
• Iowa Code section 384.12 — The authority for additions to the $8.10 general fund levy
extends to 21 enumerated purposes. Some of the purposes have rate limits, and others are
unlimited. Additions to the $8.10 general fund levy are available to do the following:
• Support instrumental or vocal music groups (voter-approved, rate limited to $0.135).
• Develop, maintain, and operate a memorial building or monument (voter-approved, rate
lim