There is $120 million in surplus state tax revenue sitting in a “Taxpayer Relief Fund.” House Speaker Kraig Paulsen, a Republican from Hiawatha, helped create the fund two years ago as a place to deposit some of the cash in the state budget that’s unspent when the fiscal year ends.

“The expectation is that’s Iowans’ money and we need to figure out a mechanism to get that returned,” Paulsen says.

Paulsen isn’t specifying which taxes might get cut.

“Haven’t put a fence around what that exactly looks like because I’m more interested in finding a meaningful solution than it being my idea or whatever,” Paulsen says.

But Republican Governor Terry Branstad is ruling out the idea that $120 million would be used to reduce the income taxes Iowans pay.

“I’m really focused on property tax,” Branstad says. “Sure, I’d like to see the income tax reduced, too, but in terms of my priority and I’ve been working on this for a couple of years and I’m really trying to perfect it, so our focus is going to be on significant property tax reduction and replacement.”

House Democratic Leader Kevin McCarthy says job creation is a priority for Democrats.

“Some of that money might be used for some short-term incentive packages,” McCarthy says. “More long-term, we’re going to want to provide commercial property tax relief.”

Senate Democratic Leader Mike Gronstal of Council Bluffs says the fund should not be used for routine state spending.

“We’ve been willing to look at using those dollars to pay for things like the property tax credits,” Gronstal says.

State officials often send local governments state tax dollars to cover property tax credits for veterans and elderly homeowners, for example. Senate Republican Leader Bill Dix of Shell Rock also suggests the money should be used to reduce taxes, although he’s not specifying which taxes.

“I think what’s most important whether it’s this year, next year or in subsequent years is we look at whatever changes we make to our tax policy that it encourages growth and investment,” Dix says. “And that will lead to rewarding hard-working Iowans for their work.”

Each year, up to $60 million in unspent money in the state budget can be deposited in the Taxpayers Relief Fund. It was created two years ago, but legislators did not specify where the money would be redirected.

Governor Branstad and the legislative leaders made their comments during a series of individual interviews with Radio Iowa.

Radio Iowa