Iowa Department of Revenue Director Courtney Kay-Decker notified county auditors on August 15, 2011 of assessment adjustments, or "equalizations", on agricultural, commercial, and residential values. By law, every two years the department is required to "equalize" property tax assessments for all property classes in all assessing jurisdictions.
Equalization is accomplished by increasing or decreasing the aggregate valuations of certain classes of property within each assessing jurisdiction. Equalization helps ensure that that all classes of property have been assessed at the value according to state law and that taxation is applied equitably statewide. An equitable assessment level among counties is also necessary to ensure fair distribution of school aid and other state services. There are assessors in 99 counties and in eight cities, for a total of 107 assessing jurisdictions.
The department equalizes the following classes of property: agricultural, residential, and commercial. The current equalization orders apply to January 1, 2011 assessments. This year, the department will issue 30 orders: 18 orders for agricultural property, 3 orders for residential property and 9 orders for commercial property. This is down from the last equalization in 2009 when the Department issued 64 orders: 31 for agricultural property, 13 for residential property and 20 for commercial property.
Agricultural assessments are more complicated than residential
Residential and commercial assessments are based upon the sales price of property or its "market value." However, agricultural assessments are more complicated. The assessment of agricultural property is based upon the productivity of the property as opposed to its market value. The department has developed a formula that city and county assessors are to use in assessing the productivity of agricultural property.
Under the formula, assessments for agricultural property are increasing 25% in 2011. This increase can primarily be attributed to the high crop prices seen within the last two years. However, Iowa law also requires the use of a statewide "rollback" factor that is applied uniformly to all property assessments within a class to limit the growth in the taxable value of the class to 4% in aggregate.
Because agricultural productivity had increased so much under the formula, the department provided information to assessors last spring in advance of the equalization orders. A majority of assessors made changes to assessments at that time and therefore will not be receiving equalization orders for their agricultural properties. The department issues preliminary equalization orders in August and final orders in October.
Final equalization orders to be published in local newspapers by Oct. 15
The final equalization orders are to be published in local official newspapers by October 15, 2011. Taxpayers will then have an opportunity to appeal increases in their assessments to their local Boards of Review from October 16-25, 2011. A chart showing the tentative adjustments issued to county auditors can be found on the Department's Website at http://iowa.gov/tax/locgov/11Chart1.pdf.
Authorized officials may request a hearing to present additional information that may affect the equalization adjustments in their counties. In addition, jurisdictions may request a method other than a uniform percentage increase to implement the equalization adjustment if they choose. For more information contact Victoria Daniels, public information officer, 515-281-8450 or Victoria.Daniels@iowa.gov.