Category: Get Out & Vote!

Property Tax Increases Take Center Stage on March 5th Special Election Ballots

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Some local governments say if you vote to renew a levy, taxes won’t go up.

But it’s like finishing paying for a car and then buying another with the same monthly payment. This hides the option of saving money instead!

The March 5, 2024, special election in 13 school districts and one county will put property tax increase questions before voters. The school districts are looking for increases in their physical plant and equipment levies (PPELs), which generate local property tax dollars for infrastructure and equipment repairs, and one district is also asking for an increase of its debt service levy (i.e., for bonds). Louisa County is asking voters for a 15-year tax increase to fund emergency medical services (EMS).

How Much Will Property Taxes Increase?

If these public measures were to pass, the total would increase next year’s property tax collections by $12.1 million. Even worse, these property tax increases are scheduled to last for 10 years or more. The total taxpayer commitment would be more than $137.4 million — and that is a conservative estimate because nobody can predict property valuation increases a decade from now.

The following table provides the details for each public measure.

What Is PPEL?

PPEL stands for “physical plant and equipment levy.” The Iowa Legislature created the tax in the early 1990s as a local funding stream to support school district facilities and equipment. One type of PPEL allows annual school board approval, while the other, including those listed above, requires public votes. Voted PPELs can be authorized for a maximum of 10 years and $1.34 per $1,000 of taxable value and are distinctive because school boards may issue bonds against them and repay the debt with interest from the revenue.

PPEL funds may only be used for maintenance projects and equipment. For the current fiscal year, 49 districts do not use this property tax levy, while 100 districts are at the maximum rate of $1.34. The statewide average tax rate is 81 cents, and it generates $206.7 million per year.

Not Telling the Whole Truth

Anytime government agencies hold a vote to increase spending or keep it the same, the burden on taxpayers increases because home values continue to go up year after year. Some districts are forthcoming about the effect on taxpayers and admit they are asking for more money; others use careful wording to convince voters the tax increase doesn’t exist.

One of the most common statements school districts will use is, “This will not cause an increase in the school district property tax rate.”

The claim is that the current tax rate includes a PPEL, and if voters agree to keep it the same, then taxes do not go up. The principle is similar to paying off a car only to run out to buy a new one at the same monthly payment. The continuing payments disguise the alternative: saving the money.

Another way to say the same thing points to a second misleading aspect, “The district believes this will not cause an increase in the school district property tax rate. This will extend the voter PPEL the district currently has for an additional 10 years. The district has had a voter PPEL since 1992.” Over time, keeping the rate the same produces inevitable increases as property values rise. Since 1992, Iowa residential property valuations have increased 274%, meaning the district has been effectively raising taxes for 30+ years.

Some districts go so far as to deploy scare tactics against voters like, “If the PPEL is not renewed, the district would need to use general fund or SAVE money to support building upkeep, transportation, and technology, delaying potential projects planned from SAVE funding.” Translation: the school would have to budget and spend money on its planned projects. State Secure an Advanced Vision for Education (SAVE) money is already earmarked for infrastructure purposes, so using it is not unreasonable.

Another common tactic is to claim, “The current PPEL rate is $0.67 per $1,000 of taxable property value. We are asking voters to consider raising that to $1.34. Despite the increase, the district is positioned financially to make changes that allow the district’s overall tax levy rate to remain flat, meaning an increase of the voted PPEL will not raise taxes.” Notice the details. The district is positioned to make changes, which doesn’t mean it will. Total spending will likely increase, meaning the burden on property owners will also increase.

Voter Resources

Click on your school or county in the table above or use the menu at the top of this page to visit your community's page to learn more about its property taxes and spending.

What Is a Revenue Purpose Statement?

What Is a Revenue Purpose Statement?

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Simply put, if the voters of your district do not approve of a Revenue Purpose Statement (RPS), your property taxes will be lower. If they approve an RPS, your school district can spend more money and keep taxes higher. All school districts receive the corresponding funds from the state regardless of RPS status; the question is where the money goes.

Details

Revenue Purpose Statement (RPS) is a ballot measure describing how a school district will spend sales tax funds the State of Iowa has dedicated to public schools through a program called Secure an Advanced Vision for Education (SAVE). State law mandates that all SAVE money must be used to pay for local property tax relief or school infrastructure needs. If a district wants to utilize its SAVE funds on infrastructure projects by spending that money or bonding against it, officials must ask voters to approve an RPS allowing them to forgo property tax relief.

Importance

Simply put, if the voters of your district do not approve of a Revenue Purpose Statement (RPS), your property taxes will be lower. If they approve an RPS, your school district can spend more money and keep taxes higher. All school districts receive the corresponding funds from the state regardless of RPS status; the question is where the money goes.

How Property Taxes Are Lowered

If a school district does not have an RPS, the SAVE revenue generated from the sales tax must be used to reduce specific local property tax levies. The only exception is if voters previously approved an RPS and the district used it for revenue bonding, then that debt must be paid off before SAVE revenue can be directed towards tax relief. The district must apply the money in the following order:

  1. To any debt service levy for general obligation bonds until it is reduced to zero. The maximum rate is $4.05 per $1,000 of taxable valuation.
  2. To any board-imposed physical plant and equipment levy (PPEL) until it is reduced to zero.
    The maximum rate is $0.33.
  3. To any voter-approved physical plant and equipment levy (PPEL) and income surtax until it is reduced to zero. The maximum rate is $1.34 and income surtax is 20%.
  4. To any public educational and recreational levy (PERL) until it is reduced to zero. The maximum rate is $0.135.
  5. To any authorized school infrastructure purpose.

Use the menu at the top of this page to see how much your district is spending.

RPS on the Ballot

Every March and September a handful of districts submit RPSs to voters. Voters should pay attention to why a district wants an RPS and what it intends to do with the proceeds.

Glenwood CSD, for example, failed to win approval of a general obligation bond in November, and officials have been very open about their plan to leverage SAVE money to build some of the facilities voters turned down last fall.  By using SAVE dollars this time around, they can bypass voter approval. Woodward-Granger CSD simply wants to extend its RPS because the current one is expiring. Meanwhile, Williamsburg CSD has listed examples of its past SAVE spending to imply how it will use funds moving forward.

The following table puts the seven pending RPS questions in context of whether the district placed a bond initiative on the November 2023 ballot as well as the growth (or decline) of local property taxes and student enrollment.

Misleading Comments by School Districts

Leading up to an election, school district officials attempt to make the case for their intentions, but their statements can sometimes be misleading.

The most common example is that “renewal of the district’s RPS will not lead to a property tax increase and will not extend an existing tax.” This is disingenuous because absent an RPS, the district’s property taxes would be decreased if all revenue bonds have been paid off. By enacting an RPS, the district extends its current property tax burden into the future. Variations on this misleading statement are that the RPS is “not endorsing a new tax burden” or that “the revenue generated has been used to meet our evolving needs while minimizing the burden on local taxpayers.”

Another misconception is that failure to approve an RPS means the district cannot access the SAVE funds. One example: “[we] ask voters to approve our Revenue Purpose Statement, a resolution necessary for districts to access sales tax revenue for a variety of purposes.” Districts receive SAVE funds with and without RPSs, it is only the use of those SAVE dollars that might be limited.

Revenue Purpose Statement Expiration

Legislation in 2019 set all RPSs voted on before July 1, 2019, to expire on January 1, 2031. For districts to continue spending SAVE funds as they wish, each must secure new RPSs approved by voters. Any new RPS will stay in effect through December 31, 2050, unless amended or repealed. For more information on the use of SAVE funds and Revenue Purpose Statements, click here.

© 2023 Iowans for Tax Relief and ITR Foundation