Iowa Senate Approves Tax Cut, School Spending (IA)
June 23, 2011
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Democrats running the Iowa Senate have approved a measure Wednesday that
sticks with their plan for cutting property taxes, while also spending more on
local schools.
The Senate ap proved the plan on a 26-21 vote along party lines with
Democrats in favor, and it now goes to the House where a different version has
been approved.
Backers argued that the property tax cut pushed by Democrats costs $50
million in the first year, but is focused on small businesses.
“The Senate’s property tax proposal gives more benefits to more
taxpayers,” said Sen. Joe Bolkcom, D-Iowa City. He argued that
Republican-backed plans give most of the benefit to big companies, many of them
from out of state.
“If you want to give a windfall to big out of state corporations, the
Republican proposal is the better one,” said Bolkcom.
The plan contrasts with proposals backed by Republican Gov. Terry Branstad
and the GOP-controlled House. They support deep reductions in business taxes
and no increase in school funding this fiscal year, followed by a 2 percent
increase in the following year.
All sides agree that commercial property taxes in the state are out of line
with neighboring states, but they have sharply different approaches to dealing
with the problem. Commercial property is taxes at 100 percent of its assessed
value, and Branstad is pushing to lower that to 60 percent.
He’s put a $250 million price tag on that package, and argues that a big
reduction is needed to spur the economy. Legislative Republicans agree.
“We continue to have very serious concerns about how their (Democrats)
property tax proposal would work and the impact it would have on economic
development,” said House Speaker Kraig Paulsen, R-Hiawatha.
The debate came as the Senate debated a string of spending bills fleshing
out the state budget. Republicans and Democrats have agreed to overa ll state
spending of $5.9 billion, but have deep differences over details. Spending on
local schools is one of those differences. Both sides have agreed to no
increase in the first year of the plan, and Republicans have agreed to a 2
percent increase in the second year.
The package passed by the Senate would increase spending by 3 percent, and
Democrats said it underscores their commitment to schools.
“We continue to be frustrated by the level of support for elementary
and secondary education,” said Senate Majority Leader Michael Gronstal,
D-Council Bluffs.
Paulsen said Republicans are frustrated because Democrats initially sought a
2 percent hike, and increased their proposal only after Republicans agreed. He
said it was tough to convince Republicans to agree to the 2 percent boost, but
he succeeded in making the case.
“We got to 2 percent, we finally got to that position and now they’ve
moved the target on us,” said Paulsen. “I think 3 percent is a
non-starter.”
With Democrats controlling the Senate and Republicans the House, the issue
is likely to be settled by House-Senate conference committees, and the first of
those were appointed Wednesday.
Paulsen said bargaining is continuing and the two sides are narrowing their
differences.
“I would hope we could reach resolution and get all the House members
back for resolution,” said Paulsen. “I’m paid to be optimistic, so
let’s be optimistic.”
The Senate also dealt with yet another issue that divides Democrats and
Republicans and that’s state spending on the Medicaid program.
The Senate has approved a package calling for the state to spend $1.1
 ;billion on the program which is shared with the federal government that
provides health care for poor and elderly people.
The Medicaid spending was part of a $1.5 billion measure funding human services
programs.
Sen. Jack Hatch, D-Des Moines of Des Moines, the main backer of the measure,
complained that it didn’t spend enough and blamed legislative Republicans and
Branstad, who have pushed for the ceiling on state spending.
“It’s the best deal we could get in a bad situation,” said Hatch.
“We’re not providing enough resources to protect the health and safety of
Iowans.”