2026 Government Relations Legislative Update - Week 13

By: Matthew H. McKinney & R.G. Schwarm

Capitol Update

PROPERTY TAX:

Identified by both Republican and Democratic legislative leaders as a top priority this session, the Senate advanced its property tax proposal on a 41–4 vote. An amendment to the Senate Property Tax bill was filed Wednesday by Ways and Means Chair Dan Dawson (R–Council Bluffs) and adopted later that same day on the Senate floor. While the amended bill (Senate File 2472) reflects progress, the two chambers have not yet reached agreement on a final compromise.

The amendment makes several significant changes. Whereas the original bill would have fully eliminated Iowa’s “rollback” system, which calculates property taxes as a percentage of assessed value, the revised version instead modifies how commercial, residential, and multi-residential properties are treated within that framework. It also repeals the 2023 property tax law that established levy rate caps for cities and counties and imposed additional consolidation and revenue requirements on local governments. In its place, it caps property tax revenue growth but ties an allowable increase to inflation (“soft cap”).

The amendment adds a Homestead exemption in addition to the reestablished rollback for primary residences consistent with the bill's previous versions. Earlier Senate proposals would have fully eliminated property taxes for homeowners age 60 and older who had paid off their mortgages; however, the revised approach instead phases in relief based on the age of the homeowner. Beginning at age 60, homeowners would receive an additional 10% Homestead exemption (for a total of 60%), with the credit increasing by another 10% each decade thereafter up to a maximum exemption of $350,000 at any age. The bill also expands the property tax credit for elderly and disabled Iowans. In addition, the Senate proposal indexes the state’s gas tax to inflation to support road and bridge improvements. It also proposes changes to Iowa’s Tax Increment Financing (TIF) system, under which property tax revenues generated within designated districts are used to fund specific development projects.

Some of the Senate provisions, including TIF reform, align with previously filed proposals from Governor Reynolds and House Republicans. Despite some of these areas of overlap, key differences remain. Notably, the House proposal (House Study Bill 596) includes a “hard” 2% cap on revenue growth and does not include provisions related to indexing Iowa’s gas tax.

AI BUDGET ANALYSIS:

In local government budget-related news, a representative from Tyler Technologies presented to the House Republican Oversight Committee on the use of artificial intelligence (AI) in budget analysis. The presentation highlighted how an AI model could be used to identify and evaluate potential inefficiencies in state and local government budgets. Committee members raised questions about the accuracy and reliability of AI-generated analysis, as well as implementation considerations and potential cost savings. The proposed program would require an initial investment of $1.5 million, with ongoing costs of approximately $900,000 annually over a three-year term.

PEDIATRIC CANCER RESEARCH:

On Wednesday, the House Appropriations Committee unanimously advanced House File 2310 by a 24–0 vote. The bill establishes dedicated state funding for pediatric cancer research at the University of Iowa, providing $3 million annually for this purpose.

Separately, researchers from the University of Iowa presented preliminary findings last week to the Senate Health and Human Services Committee regarding Iowa’s elevated cancer rates. These findings are part of a broader two-year study, with the next update expected in July. The preliminary report is available HERE.