It’s not every day that the Iowa Supreme Court accuses the Legislature of “crony capitalism.” Yet, in an extraordinary opinion issued recently, the high court did exactly that.
The court’s opinion was a rebuke to a protectionist law — and a reminder how it’s important that we maintain our government’s system of checks and balances. It also comes at a time when Republicans in the state Senate have moved to undermine that system.
First the background:
In 2020, the Legislature passed in the dark of night an omnibus bill that included a provision, added late in the process, that granted “incumbent” power companies the right of first refusal, or ROFR, for construction and maintenance of Iowa’s electric infrastructure.
Essentially, it was a sop to in-state energy companies.
Two out-of-state companies objected, however, and in 2021 filed a lawsuit challenging the law.
The companies didn’t have any luck with the district court or the court of appeals. But the Supreme Court temporarily blocked the law, ruling it violates the state constitution’s provisions that prohibit legislative “logrolling,” the practice of packaging unrelated and unpopular measures together in order to get them passed.
Here is an excerpt from the court’s opinion:
“We are not surprised the ROFR lacked enough votes to pass without logrolling. The provision is quintessentially crony capitalism. This rent-seeking, protectionist legislation is anticompetitive. Common sense tells us that competitive bidding will lower the cost of upgrading Iowa’s electric grid and that eliminating competition will enable the incumbent to command higher prices for both construction and maintenance. Ultimately, the ROFR will impose higher costs on Iowans.
The court blocked the law because of constitutional violations, not because it would raise costs on Iowans. (Iowans should ask their lawmakers why they were willing to vote for that.) But whatever the reason, the decision should remind us of the benefits that come from a robust system of checks and balances.
If the court hadn’t blocked this unconstitutional logrolling, Iowans would be looking at higher costs, and legislative power brokers also would have gotten away with the kind of shenanigans they like to pretend only happens in Chicago and Washington, D.C., not good old Des Moines.
Unfortunately, Republicans in the Legislature are even now trying to undermine one element of this state’s system of checks and balances.
A month ago, the state Senate passed a bill that would dramatically limit the powers of the state auditor, Rob Sand.
In Iowa, the auditor examines the financial practices of state and local agencies and governments, and in all the decades I’ve watched government, no matter the political party, they’ve served an important oversight function.
Unfortunately, this bill would prevent the auditor from accessing certain information. Proponents say they’re trying to protect Iowans’ privacy, but critics say the plan will give those being investigated the right to bury evidence.
A non-partisan analysis also said the bill could limit the auditor’s ability to exercise oversight over billions of dollars in state and federal funds.
The Des Moines Register reported this week that the House is making some changes, but one especially dangerous provision is apparently being left in place. The plan still includes language that would stop the auditor’s office from going to court when agencies or offices refuse to divulge information.
Instead, a three-person arbitration committee would be given the final say in these disputes. The committee, according to Senate File 478, would be made up of people appointed by the auditor, the agency being audited – and the governor.
In other words, the governor’s office would effectively hold veto power.
Already, we’ve seen the Legislature consolidate greater amounts of power in the governor’s office, and this is just another example. (Remember last year, when Kim Reynolds said she wanted “my own” attorney general and an auditor who wouldn’t sue her?)
A long list of professional auditors and a former comptroller general of the US government have come out against the bill, and it’s no wonder. Auditors must be independent to be effective. If they have to rely on the good graces of the agencies they’re auditing – and their boss – to get information, a key pillar of our system of checks and balances will be destroyed.
In short, if this bill passes, expect more cronyism in the future.
Sticker shock
All across Iowa, property assessments have skyrocketed on the heels of a hot real estate market the past couple years. And over the last few weeks, people have gotten notices in the mail telling them just how high assessments have gone.
The numbers are big.
In Scott County, residential values went up an average of about 20%, according to a report in the Quad-City Times.
Accordingly, there have been howls.
Still, I thought the first sentence of a North Scott Press article on the increases hit the nail right on the head: “Wait for the rollbacks.”
These assessment notices are just the first of many shoes to drop in figuring out property taxes for the fall of 2024 and spring of 2025. And because Iowa law only allows statewide residential and agricultural assessments to rise 3%, a “rollback” figure will be calculated to keep taxable values – and property taxes – from rising too much. Local governments also must set a property tax rate, itself a key step in figuring the ultimate tax that Iowans will pay.
In other words, if the assessment notice sent your blood pressure skyrocketing, take a moment and chill. This is the first inning of a very long game.
It’s too bad it has to be this way.
Iowa boasts a hopelessly complex system of taxing real estate (with special provisions built into the system), and for decades it’s been generally agreed upon that it needs fixing. Except nobody’s fixed it. “Property tax reform” worthy of the name is a unicorn in Iowa.
This year, Republicans who run the Legislature say they’re going to pass property tax reform. And while key lawmakers have been working for weeks, mostly behind closed doors, the end result isn’t known. Meanwhile, local governments are worried they’re going to lose revenue.
What I expect is that, in the end, “reform” will simply mean cutting property taxes or controlling their growth.
Don’t get me wrong. There’s nothing necessarily wrong with keeping taxes low, as long as local governments still have enough revenue for to pay for police and fire services and all the other things people say they want. But if that’s all that comes of it, it won’t be reform.
On the Iowa Department of Revenue’s web site, there are 22 entries explaining the various steps in the state’s property tax cycle.
I’d be shocked if lawmakers, let alone the average Iowan, can explain the rationale for why we do it this way.
For years, I’ve listened to local government officials complain about the practice of tying residential values to agricultural land. And in recent years, we’ve seen lawmakers put in place new provisions for commercial and industrial properties – as well as apartment complexes – that further complicate the system and put even more strain on local government budgets.
I remember reading a series of articles roughly 30 years ago in the Ames Tribune about how messed up Iowa’s property tax system is; well, I don’t things have gotten less messed up since then.
I can somewhat understand why reform hasn’t gotten done. There are a lot of special interests tied up in each of the tax code’s provisions and untangling them all is a gargantuan political task.
Still, Iowans ought to be able to make sense of their property taxes and assess whether they’re being treated equitably. Right now, that’s not the case.
Maybe the sticker shock from the assessment notices will prompt Iowans to demand their representatives not only keep taxes in check — but that they fix the system so we can at least understand it.
Along the Mississippi is a proud member of the Iowa Writers Collaborative. Please check out the work of my colleagues and consider subscribing to their work.
Laura Belin, Iowa Politics with Laura Belin, Windsor Heights
Doug Burns: The Iowa Mercury, Carroll
Dave Busiek: Dave Busiek on Media, Des Moines
Art Cullen, Art Cullen’s Notebook, Storm Lake
Suzanna de Baca: Dispatches from the Heartland, Huxley
Debra Engle: A Whole New World, Madison County
Julie Gammack: Julie Gammack’s Iowa Potluck, Des Moines and Okoboji
Jody Gifford: Benign Inspiration, West Des Moines
Beth Hoffman: In the Dirt, Lovilla
Dana James: New Black Iowa, Des Moines
Fern Kupfer and Joe Geha: Fern and Joe, Ames
Robert Leonard: Deep Midwest: Politics and Culture, Bussey
Tar Macias, Hola Iowa, Iowa
Kurt Meyer, Showing Up
Pat Kinney, View from Cedar Valley, Waterloo
Kyle Munson: Kyle’s Main Street, Iowa
Jane Nguyen, The Asian Iowan, West Des Moines
John Naughton, My Life, in Color, Des Moines
Chuck Offenburger: Iowa Boy Chuck Offenburger, Jefferson and Des Moines
Barry Piatt: Behind the Curtain, Washington, D.C.
Macey Spensley: The Midwest Creative
Mary Swander: Mary Swander’s Buggy Land, Kalona
Mary Swander: Mary Swander’s Emerging Voices
Cheryl Tevis, Unfinished Business, Boone County
Ed Tibbetts: Along the Mississippi, Davenport
Teresa Zilk: Talking Good, Des Moines
Also, please check out our alliance partner, Iowa Capital Dispatch. It provides hard-hitting news along with selected commentary by members of the Iowa Writers Collaborative.
Great column.
Yes, to in-depth and balanced comments.. Based on my experience working in and around the legislature, it was not uncommon for policy issues to make their way into budget bills, with little connection to the title. Nonetheless, I wonder if public officials concerned about activist judges, will try to rein in these Iowa activists on the bench.