Central Iowans furious over property tax increases

It's nearly September. Central Iowans will be checking their mailboxes and discover their property tax bills. They should prepare themselves for what they are about to find.

Iowans across the central part of the state will be as flustered as residents of the rest of the state. The current legislature and Governor Culver signed off on increasing property taxes that are substantial. Warning signs were hoisted over the last few years that the state was in for a shock following a Culver administration that overspent and increased debt. When Culver campaigned for the office of Governor four years ago, he promised Iowans that he would take care of Iowa's arduous property tax rates. His promise will be fulfilled this year in a way that most Iowans did not consider; he increased the taxes instead of deflating them.

According to the Tax Foundation, property taxes on owner-occupied housing in Iowa went from the median property taxes paid on homes in 2004 at $1253 to $1492 in 2008. Taxes as percent of home value went from 1.31% (in 2004) to 1.24% (in 2008). This was due to the fact that taxes on home owners' incomes went from 2.56% to 2.52%. Some would argue that this proves that property taxes have actually gone down. Instead, there has been an actual property tax shift since 2006 of $526.9 million dollars. As median incomes have slipped due to high unemployment rates, Culver's 10% sweeping cuts across the boards, and the loss of funding to Iowa schools, many cities were left with no choice other than raising property taxes in order to finance expenditures. 2010 and 2011 are projected to increase taxes even more.

The Tax Foundation reports that Iowa's personal income tax system consists of nine brackets. The top rate is 8.98% for those with an income level of $63,315 and above. That top rate is the 5th highest among states which levy individual income taxes. They also report that Iowa's corporate tax structure is comprised of four brackets with a top rate of 12%, which kicks in at an income level of $250,000. Iowa has the highest corporate income tax rate in the nation.

The increases have led to more jobs lost due to companies that have chosen to move out of state due to the high corporate taxes. They have led to small business owners giving up their businesses.  It then trickled down to individuals who were let go from those jobs and other workplaces. This led to a lower median income. Yet the tax rate on home owners' incomes went down only 4/100ths in percentage points.

In 2002, President George W. Bush stood before a crowd in Atlanta, Georgia and said, "I do believe in the American Dream. I believe there is such a thing as the American Dream. And I believe those of us who have been given positions of responsibility must do everything we can to spotlight the dream and to make sure the dream shines in all neighborhoods, all throughout our country. Owning a home is a part of that dream, it just is. Right here in America if you own your own home, you're realizing the American Dream."

That speech drove shifts in how financial companies offered home loans. Creditors allowed loans to Americans with lower incomes and substantially poor credit. Homeowners were encouraged to take out home-equity loans. Home ownership was marketed as an investment instead of an opportunity to have a place to dwell. When the housing market ruptured, millions of homeowners could no longer afford their mortgage payments. Many owners were 'upside down'; the worth of their homes less than the money they actually owed the financial institution carrying the loan. In 2008, banking institutions repossessed 860,000 homes. That number went up to 918,000 in 2009. The American Dream of home ownership has now become horrifying. With many homeowners already in desperation over how they are going to manage their payments with financial institutions, many have simply walked away from their homes.

Iowa's property tax increases are an obstacle to much-needed job creation. Last week Iowa's unemployment rate increased another tenth of a percent higher to 6.8%. Many Iowa counties have lost population due to a lack of job opportunities. Iowans who are renting will likely see the increased property tax tacked onto their monthly statement due to landlords being unable to handle the burden alone.

State Senator Paul McKinley said this week, "Iowans are ready to embrace a positive agenda that focuses on real property tax relief, responsible budgeting and fostering a climate where private sector job creation can flourish. If given the opportunity to lead, Senate Republicans pledge to make those issues our chief focus."

R. Anthony, a Des Moines metro resident said in an interview, "I lost my job.  I have been putting in applications all over the metro.  I have been to workforce development.  My unemployment ran out.  There are jobs posted all over the classified section in the newspapers, but I keep receiving letters saying that they are looking for more qualified workers.  I can't see how someone with a Bachelor's degree is less qualified than someone who dropped out of high school, but somehow they can work at Wendy's and I can't?  If my property taxes go up this year, I am going to lose my house, plain and simple."

Linda Jones, a resident of Jasper County, said, "I opened my tax statement and about fainted.  I really am not sure how the state can do this to us when we are already in trouble due to the economy.  Retirement won't cover this kind of expense, which means that my husband and I will have to keep working as long as we can or we'll be out on the street.  It's a shame."

"There are going to be a lot of homeowners who are going to step into my office and tell me they can't afford their house payments any more," a Wells Fargo loan officer said on Friday.  "I don't know what to tell them to make them feel better.  I can't suggest they get a better job that pays more money because, quite frankly, they're lucky if they have a job.  I am lucky I have my job."

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This Examiner covers U.S. and Iowa politics that are important to central Iowans. The focus is on how central Iowa is affected and how the local community relates to local, state, and national political issues.  Iowa counties which are included in central Iowa coverage are within the 3rd and 4th Congressional District: Polk, Jasper, Poweshiek, Marion, Mahaska, Tama, Marshall, Story, Boone, Dallas, Madison, Warren.