July 29, 2015

Branstad axes extra money for K-12 public schools, three state universities

Governor Terry Branstad.

Governor Terry Branstad.

Governor Terry Branstad has been hinting for weeks that he was unhappy with the legislature’s bipartisan compromise on education funding — and late this afternoon the governor used his item veto authority to reject nearly $56 million in proposed funding for K-12 public schools.

Branstad points to $3 billion in state aide that he did approve for public school districts, but the governor says he cannot approve a one-time allotment of $56 million more. This past Monday Branstad told reporters that kind of one-time spending could “set the state up” for an across-the-board budget cut if state tax revenues fall.

“I want to maintain stability and predictability,” Branstad said. “And I want to make sure that we have a sustainable budget for the long term.”

The president of the state teachers union says the extra money would have been “a small degree of relief” for some school districts and Branstad’s decision to cut that money out of the legislature’s budget plan shows “his lack of commitment to public education.” A top Democrat in the Iowa Senate says the governor’s move not only “undermines” the bipartisan deal legislators struck, it jeopardizes a proposed tuition freeze at the three state universities. Branstad rejected one-time spending increases for the University of Iowa, Iowa State Universty and the University of Northern Iowa.

The chairman of the Senate Appropriations Committee says there’s “no reason” for the governor to cut so deeply since there’s been strong growth in state tax revenue. The state collected more than $8 billion in taxes in the last 12 months.

In other official action Thursday, Branstad followed through and formally rejected the bipartisan proposal that called for keeping the state-run Mental Health Institutes in Clarinda and Mount Pleasant open. The two facilities actually were closed for good earlier this week.

In addition to approving 14 budget bills that outline state spending plans for the next 12 months, there were a host of policy items stuck in the bills Branstad took action on today. For instance, non-public schools in Iowa are now required by state law to abide by the same school start date approved for public schools. The school start date debate raged until earlier this spring when legislators and the governor agreed that August 23 is the earliest day school may start in the fall.

Due to another policy item stuck in a budget bill, developers of a new reservoir near Osceola will have to prove they’ve exhausted all other options before they may seize property through eminent domain for the project. Backers of the project say they first started talking about Osceola’s limited water supply in 1992 and the area can’t grow economically without more water. Legislators who pushed for the new hurdles for  the project say they doubt developers’ claims that a current lake in Osceola couldn’t be expanded instead.

State tax receipts for 2015 fiscal year are just over $8 billion

One Hundred US Dollar Notes, close upFor the first time in state history, overall state tax collections for a fiscal year have topped $8 billion.

State officials have to subtract tax refunds and local option sales tax payments to schools from that $8 billion figure. It represents gross state tax receipts. That means net state tax collections were over $6.6 billion for the state fiscal year that ended Tuesday.

A report from the Legislative Services Agency indicates state tax collections grew by six percent over the 12 month period. That growth rate beat the official expectation of 5.5 percent growth in state tax revenue during the fiscal year.

The six percent increase amounts to nearly $377 million in additional tax payments to the state this fiscal year compared to the last one. The increase was spurred by a nearly six percent increase in personal income tax payments to the state, plus corporate income tax payment to the state were up by about five percent. Sales and use tax payments to the state were up by more than four percent. That’s just under the prediction from a three-member panel that sets an official estimate of state tax collections. Lawmakers use that prediction as the basis for their state budget plan.

Senator Grassley introducing bill to protect taxpayers from IRS

Senator Chuck Grassley

Senator Chuck Grassley

Recent incidents involving mismanagement and inappropriate conduct by employees at the Internal Revenue Service have shaken what little confidence taxpayers had in the agency, according to Iowa Senator Chuck Grassley.

“This afternoon, I will announce the introduction of a bill aimed at insuring that appropriate safeguards are in place to protect taxpayers’ rights by preventing IRS abuses,” Grassley says. The IRS has never been and never will be an agency anyone is glad to hear from, but Grassley says taxpayers should at least have the piece of mind they’ll be getting a “fair shake” if there’s an issue.

The new bill is needed, he says. “The legislation has new taxpayer protections,” Grassley says. “It also updates and strengthens several provisions enacted in prior Taxpayer Bill of Rights bills.”

The legislation sends a clear message, Grassley says, that poor service from the IRS won’t be tolerated.


Legislature’s gas tax fight ‘seemed to…suck the oxygen out of the building’

The just-concluded 2015 Iowa legislative session will likely be remembered for one thing: lawmakers raised the state gas tax by a dime a gallon.

Scott Newhard of the Associated General Contractors of Iowa has been lobbying for an increase in the state’s fuel tax for years. He said the timing was crucial, as it would have been “very difficult” to pass a gas tax increase at the end of this legislative session.

“I am glad they did it when they did,” he said this week, with a laugh.

The vote came in late February and the 10-cent hike took effect March 1. Dave Scott of the Iowa Good Roads Association would like to see some sort of mechanism that would automatically increase the tax incrementally every few years, to ensure the state’s road construction budget keeps up with inflation, but that wasn’t part of the deal, so this year’s divisive gas tax debate may be replayed in five or 10 or 20 years.

“Many of the legislators here said, ‘You know, hey, we were elected to take tough votes,'” Scott said this week.

The top Republican in the House took some extraordinary steps to ensure the gas tax advanced and those actions left some of the other House Republicans who opposed the tax hike fuming. Yesterday, just after the legislature adjourned for the year, House Speaker Kraig Paulsen was asked about the decision to force the deal through in February.

“I think it’s something the session will obviously be remembered for. I mean, we hadn’t done it for a couple of decades,” Paulsen said.

Cedar Rapids Gazette reporter James Q. Lyuch asked: “Remembered in a good way or a bad way?”

Paulsen replied: “I guess that depends on your perspective. I think it will probably be remembered both ways.”

Senate Democratic Leader Mike Gronstal said passing the gas tax was a “significant achievement” because it has increased the state budget for transportation infrastructure, but Gronstal admitted “at times” it did complicate negotiations on many other issues.

“It occupied time and energy of the session, seemed to, at some level, suck the oxygen out of the building and that’s part of the reason why we’re here in June,” Gronstal told reporters Friday after the legislature’s adjourned.

Freshman Representative Steven Holt, a Republican from Denison who voted against the gas tax increase, expects the issue to be raised by Republican voters in 2016.

“Particularly those core voters who vote in primaries,” Hotl said. “They don’t vote based on who might be running, but they vote on a core philosophy about government.”

In other action, legislators passed a new law governing when schools may start in the fall and they gave cities that allow sledding on city property new liability protections from lawsuits. Among the issues that stalled: raising the state’s minimum wage. Charles Wishman of the Iowa Federation of Labor pointed out this week that the minimum wage went up to $8.50 an hour in Nebraska and South Dakota in January.

“Right now, every state around us with the exception of Wisconsin has a higher minimum wage than we do,” Wishman said during an interview. “I don’t think that anybody here wants Iowa to be known as the low wage state of the Midwest and unfortunately that’s what we’re becoming.”

But Wishman said labor groups also saw progress on key issues during the 2015 Iowa legislative session. Unions that represent building tradesmen supported the gas tax increase — since it is boosting road construction projects.

“We see that as something that should be creating quite a few jobs here in Iowa,” Wishman said.

Wishman says there will be union work in the construction of an oil pipeline and construction of transmission lines to carry wind power out of the state and union officials are pleased legislators did not erect any roadblocks to either project. Nicole Crain of the Iowa Association of Business and Industry said her group wanted legislators to clarify a “gray area” in state tax law, to ensure manufacturers aren’t forced to pay the state sales tax on items that are used in the manufacturing process.

“Unfortunately, this is the third year we’ve tried it and haven’t been successful, so we’re going to reevaluate and see,” Crain said late this week. “But overall I think it seems people stuck to their principles, making sure they have a balanced budget and those are key things to the business economy in Iowa.”

On the legislature’s next-to-last day, incentives to boost the availability of broadband and make it easier for cell phone companies to erect new towers won approval in the House and Senate. The governor’s anti-bullying bill, however, failed for a third year.

Two budget bills totaling more than $1.5 billion headed to governor

Iowa State Capitol

Iowa State Capitol

The pace is quickening at the statehouse, as lawmakers aim to conclude the 2015 legislative session this week. Earlier this afternoon, In less than half an hour, a bill that outlines $561 million in spending for the state’s prison system and the Department of Public Safety cleared both the Iowa Senate and the Iowa House and is headed to the governor for review. Senator Rich Taylor, a Democrat from Mount Pleasant, worked at the state’s maximum security prison for 27 years.

“We’re short-changing our prison systems and we’re asking for trouble,” Taylor said. “We need to try to do better to fund these prisons before we have a disaster.”

Representative Todd Taylor, a Democrat from Cedar Rapids who is not related to Senator Taylor, also objected to the level of spending for prisons.

“A status quo is yesterday’s budget numbers with tomorrow’s problems,” Taylor said.

Senator Tom Courtney, a Democrat from Burlington, said there’s a $4 million boost in next year’s budget for these agencies, plus some spending within the budget plan has been reprioritized.

“There are increases for the Department of Corrections and some of the community based correction districts,” Courtney said. “In addition, the Department of Public Safety is receiving an increase as well.”

Representative Gary Worthan, a Republican from Storm Lake, said the final product is a compromise that ensures the prison system gets more operating funds.

“This budget will serve the people of Iowa. It will move the state forward and meets the needs of the departments,” Worthan said.

As of today, the state’s nine prisons housed nearly 8,283 inmates. That’s 13.84 percent over the design capacity of the facilities. Another 31,302 people are either being monitored by a parole officer or are living in a community-based correctional facility, like a half-way house or a work-release program.

In other legislative action today, the senate gave final approval to a bill that outlines $986 million in spending at the three public universities, the 15 area community colleges and the Iowa Department of Education. The Senate also gave final approval to a bill that would erase the state sales tax on the fees paid at coin-operated laundromats in Iowa. Iowa is one of just four states that charge the sales tax on the coins collected from the washers and dryers at Laundromats.

State tax collections up 6.1 percent over past 11 months

There’s been a noticeable drop in farm income in Iowa this year, but the rest of the state’s economy is on the upswing.

The State of Iowa collected nearly $970 million in gros tax receipts in May. There has been only one other month in Iowa history when more taxes were taken in by the state and that was back in May of 2013. State tax receipts for the past 11 months are more than six percent higher than during the same period in the previous fiscal year.

Iowans have paid nearly 22 percent more in personal income taxes to the state. That growth in salaries and wages more than makes up for the dip in farm income.

Tax credit proposed for installing call buttons on gas pumps

Gas-pumpThe Iowa Senate has approved legislation designed to help more disabled motorists summon a gas station employee to pump their gas. Senator Rita Hart, a Democrat from Wheatland, has been touting the idea for the past few years.

“The world has changed,” Hart said Tuesday. “It’s no longer full-serve. It’s now self-serve and disabiled individuals who find it difficult or impossible to use the controls at the pumps were left out.”

The bill would not force all Iowa gas station owners to equip their pumps with new call buttons. Instead, gas stations would get a new a 500-dollar state tax credit for every “refueling assistance device” installed. The proposal cleared the Senate on a 30-20 vote on Tuesday afternoon, but has not yet been considered in a House committee.