Study shows Iowa schools raising property taxes by $133 million to offset state spending cuts

Study: Iowa schools raise property taxes by $133M

DES MOINES, Iowa — Local school districts have raised property taxes by more than $133 million for the upcoming school year, according to a new study that has fueled a hotly partisan debate over who’s to blame for the increase.

Republicans said Democrats’ decision to cut state education spending forced the property tax increase, while Democrats said they did all that was possible to head it off.

A report on school finances by the nonpartisan Legislative Services Agency found that local schools are projected to collect more than $1.6 billion in property taxes during the next budget year, up from $1.5 billion this year for an 8.8 percent increase.

Republicans seized on the report released Monday to argue that Democrats who control the Legislature forced a tax increase on local property owners when they cut back state aid to local schools, a charge Democrats quickly rejected.

“Local schools made local decisions,” said Senate Majority Leader Michael Gronstal, D-Council Bluffs.

At issue is the complex method Iowa uses to fund schools with a combination of local property and state taxes. Each year, lawmakers tell school districts how much their budgets can increase and then approve a separate measure setting aside the money to pay for that increase.

For the next school year, lawmakers told schools their budgets could grow by 2 percent, but they set aside only $2.49 billion to cover that, leaving schools $156 million short. Local schools responded by raising property taxes, the study found.

House Minority Leader Kraig Paulsen, R-Hiawatha, said Democrats knew districts would have to raise property taxes when they slashed state assistance to schools.

“Balancing the budget on the backs of property taxpayers is not good enough, and it’s lazy fiscal management,” Paulsen said.

Gronstal said Democrats took steps to head off the increase, including approving a measure requiring local schools to spend down cash reserves before raising taxes.

He said lawmakers were forced to make deep cuts in state spending because the recession dried up tax collections. When faced with raising state taxes or cutting spending, they opted to cut spending, he said.

They encouraged local schools to do the same, but ultimately that decision was made by local school boards, Gronstal said.

Management of the state budget is likely to be a central issue in this year’s gubernatorial election and the fight for control of the Legislature.

In the governor’s race, where Democratic Gov. Chet Culver faces former Republican Gov. Terry Branstad, Branstad has argued Culver bungled the state’s budget and left projected shortfalls of nearly $1 billion.

Culver has argued he balanced the state budget without boosting taxes, in sharp contrast to Branstad’s history of twice increasing the sales tax and boosting the gasoline tax.

Similar arguments are raging in legislative districts as Republicans seek to reverse a 56-44 Democratic edge in the House and a 32-18 margin in the Senate. All 100 House seats and 25 of the 50 Senate seats are on the ballot this year.