December 26, 2014

An ever-expanding tax deal pending at statehouse

The 150 members of the Iowa House and Senate return to the statehouse later today for what could be the final week of the 2012 legislative session. Legislators need to make final decisions on a more than $6 billion state spending plan as well as iron out the details of a wide-ranging tax plan. Jeff Boeyink, the governor’s chief of staff, doesn’t expect it to happen quickly.

“I still think we’re looking at Friday as a best case,” Boeyink says.

Senate Democratic Leader Mike Gronstal says a “framework” is coming together that should lead to the conclusion of the 2012 legislative session sometime this week.

“I’m feeling like we’ll be able to wind this thing down pretty easily,” Gronstal says.

House Speaker Kraig Paulsen, a Republican from Hiawatha, is equally upbeat.

“I think we continue to get closer together. I remain optimistic that we can get done in a relatively short time frame,” Paulsen says. “I don’t know whether that’s two days or five or whatever the number ends up being, but I think we’re definitely in that window.”

The tax plan that seems to be coming together includes an ever-expanding list of proposals, from a reduction in commercial property tax rates that Republican Governor Terry Branstad wants to the tax break for low income Iowans that Senate Democrats want. Gronstal, the top Democrat in the legislature, is striking a conciliatory tone.

“People of good faith are working together, trying to find common ground,” Gronstal says. “We see some of the truth of what the governor says is important and I think they understand we have strong beliefs about what we see as important, so I’m just trying to keep everybody working together and looking for common ground and compromise.”

Governor Branstad hails the part of the agreement that will limit the link between home values and the value of farmland which is based on a formula that calculates both the assessed value of the farmland and the value of the crops grown on it.

“There’s a realization that we cannot just continue to fail to act on something that would result in massive increases in property taxes because of the way the productivity formula works and the fact that residential’s tied to it,” Branstad says, “and without action, we would see considerable impact.”

The wide-ranging tax plan also would address a change in the way some equipment in the telecommunications industry is taxed and it would change the property tax assessments for apartments and condos, so they’d be subject to lower residential property tax rates instead of far higher commercial property tax rates. The overall reduction in commercial property tax rates would not apply to businesses located in so-called “tax increment financing districts” either — a move that significantly reduces the amount of commercial property that would be covered. That’s not Branstad’s first choice, but the governor’s chief of staff says Branstad’s willing to make the concession in order to get some reduction in commercial property taxes.

“Perfect is always going to get in the way of getting something done and so from our perspective — the governor’s perspective — we want to make a start, however that start looks and a significant start on dealing with commercial and industrial property taxes,” Boeyink says, “and I think the framework that we’ve developed with the House and the Senate will get us there.”

There was a glitch in the legislature’s computer system last Thursday afternoon, prompting the House to delay action until this week on a key bill that redesigns the way mental health services are delivered to poor Iowans. Legislators also need to strike a final deal on education reform before the work of the 2012 session concludes.