February 9, 2012

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Gas tax hike, property tax cut & tax credit for low-income advance

February 8, 2012 By

Three different tax proposals advanced at the statehouse today, although future prospects for all three are uncertain.

Two of the proposals would cut income and property taxes for some Iowans, while the other would raise the state’s gas tax. A three-member subcommittee in the Iowa Senate signed off on a 10-cent hike in the gas tax. Senator Tom Rielly, a Democrat from Oskaloosa, is the key architect of the plan.

“I think it should be pointed out that anytime we talk about any fee increase, it’s a last resort and I am convinced that we are at that last resort,” Rielly said this afternoon.

Officials estimate current state gas tax collections are falling $215 million dollars short of what’s needed to fix and build roads and bridges in the state. Senator Rielly suggested there’s nowhere left to cut in the DOT’s budget to find that kind of extra cash.

“Since 2002, we have 750 fewer employees (in the DOT). We have turned over almost 800 miles of roads to cities ad counties. We have closed 40 maintenance garages and engineering offices,” Rielly said. “That freed up about $45 million.”

Senator Tim Kapucian, a Republican from Keystone, signed-off on the proposal which would raise the gas tax five-cents on January 1st, 2013 and by another nickel on January 1st of 2014. Kapucian said many roads and bridges in rural Iowa are “dilapidated.”

“I live between a couple of small towns in eastern Iowa,” Kapucian said, “and the bridges that go in and out of that town where there are millions of grain stored, we cannot legally get those trucks back out to Highway 30, down to Cedar Rapids or Eddyville — wherever it’s going.”

With increasing grain yields and heavier farm equipment, Kapucian said the quality of rural roads is crucial to get that grain to market.

“We have more and more corn being produced off every acre every year, the soybeans — we just have to have an infrastructure to be able to compete worldwide and help feed the world and that’s one of the reasons why, as much as I do not like a tax increase, I feel it’s imperative,” Kapucian sai. “We have to take a look at this at this time.”

Senator Matt McCoy, a Democrat from Des Moines, is the third co-signer who helped the proposal clear a subcommittee this afternoon.

“We’re the third worst state in the nation in terms of bridge deficiencies and in the state of Iowa we’ve got a multi-billion dollar problem and kicking the can down the road is no longer an option,” McCoy said. 

Increasing the state gas tax by a dime over the next two years would raise an additional $220 million for the state’s road fund.

As for those other tax proposals, the Senate Ways and Means Committee this afternoon approved a bill that would increase a tax break for low income Iowans who qualify for the federal “Earned Income Tax Credit.” Republican Governor Terry Branstad vetoed a similar proposal twice last year, but Senator Joe Bolkcom, a Democrat from Iowa City, is hoping the third time’s a charm.

“And get a much-needed tax cut to people that can really use the help,” Bolkcom said. Most Iowa families with an annual income of $45,000 or less qualify for the Earned Income Tax Credit, and the proposal now pending in the senate would almost double the state credit for those households.

The third tax-related proposal considered at the statehouse Wednesday deals with cutting commercial property taxes. House Republicans have made some adjustments in their plan. Representative Tom Sands of Wapello says they’ve abandoned one of Republican Governor Branstad’s ideas on the subject that was intended to address some of the objections from cities and counties.

“I think they have some valid concerns and we tried to address them and listen to them,” Sands says. “But every time we tried to meet that, they come up with a different concern or the same concern that that one won’t work.”

The mayors from Iowa’s 10 largest cities held a news conference at the statehouse earlier today to say cities need “more, not less” tax revenue.  Republicans on the House Ways and Means Committee voted this evening to approve the GOP’s latest version of commercial property tax reform.

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Tax break plan for the Field of Dreams site clears first Senate vote

February 8, 2012 By

A bill that would provide a tax break to a project to expand the Field of Dreams site near Dyersville in eastern Iowa cleared an initial hurdle in the Iowa Senate today. One critic said the state should not be singling out one economic development opportunity over another, but Senator Tod Bowman, a Democrat from Maquoketa, couldn’t resist quoting the 1989 movie’s signature line.

“I probably can’t begin without saying if we build it they will come,” Bowman said. He went on to explain that the tax break would boost the rural economy by helping investors preserve the movie site and add a youth sport complex for traveling teams.

He says it’s estimated the expanded site would generate $272-million in revenues over 10 years with 95% of that money coming from out of state. Bowman said the project would get a sales tax rebate on sales that would never have happened without the expansion, so the state has no skin in the game.

But Senator Jack Whitver, a Republican from Ankeny, did not sign on. “It’s just I don’t want to be in the middle of deciding who wins and who loses in government,” Whitver said. In other words giving a tax break to the Field of Dreams project, but not for some other youth sports complex.

“At this time I’m just not comfortable saying we like you we’re going to let you succeed and not you in Ankeny or Sioux City or Council Bluffs,” Whitver said.

“Go the Distance Baseball” is seeking investors to underwrite the $38-million facility. Spokesman David Adelman says the tax break is important to the project.

“It significantly affects our ability to go towards investors, saying that the state is not interested in participating,” Adelman said. Under the bill, the project dubbed “Allstar Ballpark Heaven” would get a sales tax rebate for 10 years or up to 16-million-dollars once they’re up and running.

A similar tax break helped create the Iowa Speedway in Newton. The bill advances to the Senate Economic Growth Committee.

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Mayors deliver “more, not less” message at capitol (audio)

February 8, 2012 By

Cedar Rapids Mayor Ron Corbett.

Mayors from Iowa’s 10 largest cities say they “need more, not less” tax revenue to remain the key hubs for jobs in the state.

 The newly-formed “Iowa Metropolitan Coalition” touts an Iowa State University study indicating 62 percent of the jobs in Iowa’s 10 largest cities are filled by people who live in adjacent suburban or rural areas.

Waterloo Mayor Buck Clark is among the mayors and other big-city officials who gathered outdoors for a news conference today on the statehouse stops.

“To specifically point out the importance our core cities have on the entire vitality and financial success on whole regions in the state,” Clark said, in explaining the event. “Our cities provide jobs and quality of life to our own residents, but they also fuel the economy of our counties and of our neighboring communities.”

Republican Governor Terry Branstad and legislators have been debating the idea of reducing the amount of commercial property taxes cities may collect. Des Moines Mayor Frank Cownie argued city governments are running bare-bone budgets today and can’t afford more reductions.

“Cities need more dollars for economic development. We need more dollars for infrastructure. We need more dollars for flood (control and mitigation),” Cownie said. “We need more dollars, not less.”

Cities used to get money from bank franchise fees and from property taxes on machinery and equipment, but Cownie said state officials in the past shut down those sources of taxes, too.

“We have an ever shrinking source of revenues,” Cownie said. “I think we have a lot of ideas about what we could do, but certainly the solution for the future of Iowa is not to shrink the revenue sources to the place where this state and job opportunity is growing.”

Cedar Rapids Mayor Ron Corbett said the economies of Iowa’s largest cities are “equally as strong” as the state’s robust ag economy. 

“Cities oftentimes are on the front lines when it comes job creation,” Corbett said. “We work hand-in-hand individually, and our staffs do, with businesses that are looking to locate and expand in our community.”

According to the analysis from Iowa State University economist David Swenson, 29 percent of Iowans live in the state’s 10 largest cities and those cities generate 39 percent of the state’s gross domestic product.

AUDIO of today’s news conference.

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Possible tax deal emerging

February 6, 2012 By

Democrats in the Iowa Senate have mounted a public relations campaign to push for enhancing a tax credit that benefits low income Iowans. Senator Joe Bolkcom, a Democrat from Iowa City, spoke at a statehouse news conference this past Thursday.

“I can’t think of a more important tax cut right now,” he said.

Last year, Republican Governor Terry Branstad twice vetoed an increase in the “Earned Income Tax Credit” for Iowa families making less than $45,000 a year, but he’s less confrontational now.

“I think there’s a possibility of working something out there,” Branstad says.

What Branstad envisions is a larger tax deal that would include reducing commercial property taxes.

“I’m willing to consider the Earned Income Tax Credit (increase) as part of an overall tax reform package,” Branstad says.

Branstad talked about the possibility of such a deal Friday during an appearance on Iowa Public Television.

“I think that it’s critically important that we address commercial property tax. It’s been a problem for 30 years,” Brasntad said. “Two previous governors and I don’t know how many General Assemblies have failed to address it.”

Last Thursday, Senate Democrats invited Julie Heck of Pleasantville — a single mother of three — to speak at a statehouse news conference to tout the tax break that’s geared toward low-income Iowans.

“In recent years the E.I.T.C. refund has helped me put a downpayment on a car so that I had reliable transportation to get to school and work,” Heck said.

According to the Iowa Child and Family Policy Center, 37 percent of Iowa children live in a household that gets a tax refund through the Earned Income Tax Credit. Senator Bolkcom intends to propose nearly doubling the state Earned Income Tax Credit and a bill to accomplish that is on this week’s Senate Ways and Means Committee agenda.

“Until we get this passed, that long list of special interest tax treatments and tax policy ahead of us is going to be on the shelf,” Bolkcom said.

He’s talking, of course, about the governor’s proposal to cut commercial property taxes.

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Sign of growing economy? State tax collections up

February 1, 2012 By

In what may be a sign of a growing economy, state tax collections are growing. 

The state fiscal year started July 1. The latest data through January 31 shows net state tax receipts are up 5.3 percent compared to the same seven-month period a year ago. Iowans appear to be earning more. Overall personal income tax payments to the state are up four percent. For those Iowans on a company payroll, taxes withheld from paychecks grew by more than 2.5 percent. However, there was a 10 percent increase in estimated state income tax payments that come from self-employed Iowans.

Iowans may be making more purchases, too, as state sales taxes grew 4.6 percent in the last seven months. January was a particularly strong month. State sales tax collections grew nearly 19 percent in January, although some of that may be taxes from sales in December, as there was a timing issue at the turn of the year for submitting sales tax receipts to the state.

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Democrat vows to block property tax reform until tax credit passes

February 1, 2012 By

A key senator has publicly issued a new challenge as legislators struggle to resolve their dispute over how to cut commercial property taxes. Senator Joe Bolkcom, a Democrat from Iowa City, is chairman of the Senate panel that drafts tax policy.

“No tax cut will pass the Senate Ways and Means Committee before the ‘working families tax cut’ is passed for the third time by the Senate, is passed for the third time by the House, and finally signed into law by Governor Branstad,” Bolkcom said on the Senate floor on Tuesday.

He’s talking about what’s called the Earned Income Tax Credit, a tax break geared toward low-income households with an annual income of less than $45,000.

“When you cut taxes for these working families, the money won’t be spent on yachts, third homes or stashed in Swiss bank accounts,” Bolkcom said. “…They will use that tax cut to buy things from local Iowa business — things like milk, gas, pay for rent, fix their car, put food on the table.”

Last year the Republican-led House and Democratically-led Senate twice passed an increase in this tax break, but Republican Governor Terry Branstad rejected it on both occasions. Bolkcom is refusing to pass any sort of commercial property tax cut until Branstad agrees to increase the Earned Income Tax Credit.

“This is a pro-family, pro-economic growth, pro-work tax cut,” Bolkcom said. Branstad has said this particular tax break for low-income Iowans is too big a hit to the state treasury.

Increasing the Earned Income Tax Credit to 10 percent would have saved low-income Iowa families about $28.5 million in taxes last year, taxes that wouldn’t have been paid to the state. Branstad has said he prefers tax breaks that would bring “new business and jobs” to the state, like the reduction in commercial property taxes. Branstad has vowed to press for a “comprehensive” approach to tax policy rather than giving tax breaks to certain classes of individuals.

About 240,000 low income families qualify for the Earned Income Tax Credit.

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IRS says many still leaving tax credit on the table

January 31, 2012 By

The Internal Revenue Service is asking you to be sure to check and see if you are eligible for the Earned Income Tax Credit or ETIC. I.R.S. spokesperson, Verlinda Paul, says many people don’t get the credit because they don’t know about it.

“Anyone with earnings of less than $49,000 really should see if they qualify,” Paul says. “We’ve found that four-out-of-five eligible workers claims the credit, so we’re really trying to reach that one-out-of-five that may not even realize that they qualify for the credit.”

Paul says the amount of credit depends on income, but also your marital status and family size. You have to file a tax return to qualify for the credit.

“So often people who don’t have a tax-filing requirement may be leaving money on the table. So we encourage everyone to go to: irs.gov, and especially if they make $49,000 or less, to use the EITC assistant to check out if they qualify for this credit,” Paul says.

There is also help available if you want to file a tax return to take advantage of the credit. Paul says,”They can do to a volunteer income tax preparation site and get free tax preparation. There are about 12,000 across the country and the best way to find the one nearest to them is to call 1-800-906-9887.”

You can also file your taxes free on the I.R.S. website at irs.gov. The I.R.S. says around 207,000 families received around 414-million-dollars last year from the federal Earned Income Tax Credit with the average refund being 1,999.

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