Governor Terry Branstad made a rare appearance in the Iowa House this morning to watch as legislators took the final votes on a plan supporters say will cut taxes by at least $400 million over the next four years.

“We are really delighted,” Branstad told reporters after he shook hands with the top Republican in the legislature. “This is a good example of bipartisan cooperation, making some tough decisions that have been put off for decades (in) this last bill of significant property tax relief for the taxpayers of Iowa.”

The bill will reduce commercial property tax rates by 10 percent over the next two years and it creates a new commercial property tax credit. The bill includes an increase in an income tax credit that benefits low-income Iowans as well as a new “Taxpayer Trust Fund” tax credit that will be worth about $60 per taxpayer this year.

Branstad has repeatedly said the state should not accept the lure of federal funds to expand Medicaid to cover more uninsured Iowans, but in the end he is accepting a compromise that means the state will take the money, but a sort of hybrid plan is created that will see the part of the money used for the purchase of private insurance and the rest to finance new benefits that will require participants to follow doctor’s orders to improve their health, or pay part of the premium.

“This new Iowa Health & Wellness Plan…puts Iowa in the forefront of our goal to be the healthiest state in the nation and refocuses the health system on things that are really going to help people improve their health and wellbeing, rather than just put more people in the system,” Branstad told reporters.

Branstad said “everybody” in the legislature and in his own office deserve credit for the achievements of the 2013 session, including that tax plan, the health care reform compromise and an education reform package that passed the House and Senate yesterday.

“We had certain priorities. The House had certain priorities. The Senate had certain priorities and we tried to bring those together to make it a win-win and at the end of the day we were able to accomplish that on all of these big issues,” Branstad said.

Branstad is nearing the end of his fifth term as governor and this is the 19th year he’s negotiated deals with legislators.

“I think it’s the best that I can remember…in terms of getting big things accomplished,” Branstad said. “Property tax relief has been really really tough for a long, long period of time.”

The governor said he and legislators wanted to show that, in contract to Washington, D.C., Iowa lawmakers could “work together…instead of spending all our time in conflict.”

A two and a half year logjam has broken at the statehouse and the Iowa Senate has overwhelmingly approved a plan that cuts commercial property taxes and includes proposals to reduce income taxes.

Senator Matt McCoy, a Democrat from Des Moines, was among the 43 Democrats and Republicans who voted for the plan.

“The Iowa legislature demonstrates today that compromise is not a dirty word,” McCoy said.

The compromise includes the Republican-favored approach of rolling back commercial property tax rates by 10 percent over the next two years, along with a new tax credit for commercial property owners that McCoy and other Democrats wanted.

“Two-thirds of small businesses in Iowa are going to see at least a 39 percent reduction in their taxes,” McCoy said.

Senator Rob Hogg of Cedar Rapids was one of six Democrats who voted against the plan.

“Just because it’s a compromise doesn’t mean it’s a good compromise,” Hogg said.

Hogg argued the plan cuts taxes too much and will hamstring the ability of state and local governments to meet the needs of Iowans.

“I want to know state troopers are going to be there to help me. I want to know my prison guards are safe and we’re going to prevent escapes,” Hogg said. “I want to know that we have a children’s welfare system that works. I want to know that people with mental health conditions are getting treatment that they need.”

Hogg was the only opponent in the senate to voice his objections. Senator Randy Feenstra, a Republican from Hull, said 1979 was the last time Iowa lawmakers took significant steps to reduce commercial property taxes.

‘We’re giving money back to our businesses,” Feenstra said. “We’re giving money back to our individual citizens and they can use that money to create jobs, to stimulate the economy, to stimulate our Main Street.”

The bill will next be considered by the Republican-led House, where it is expected to pass. Republican Governor Terry Branstad said last week he will “absolutely” sign the plan into law once it reaches his desk. Branstad this afternoon called Senate passage of the package a “milestone” that  had been “a long time coming.”

“(I’m) very pleased to see a property tax reduction bill approved,” Branstad told Radio Iowa. “A good vote – a good, solid, bipartisan majority.”

The bill passed the Senate on a 43 to six vote. The Republican-led Iowa House is expected to endorse the plan soon.

 ”So far things seem to be lining up to get education reform and also our new Iowa Health and Wellness Plan approved,” Branstad said. “And we feel good about all of ‘em and I really think it’s going to move Iowa forward in a positive way, so I think it could be a landmark session.”

A tentative compromise has been hashed out on how to cover up to 150,000 low income Iowans who don’t have health insurance.

The legislation the deals with tax issues creates a new Taxpayer Trust Fund state tax credit that will be worth up to $60 this year. It also increases an income tax credit that benefits low-income Iowans.

AUDIO of senate debate of SF295 conference committee report, runs 27:58

(This story was updated at 3 p.m. with additional information)

A flurry of votes are likely today in the Iowa House and Senate as a key legislator says there is a “very real possibility” the 2013 legislative session may conclude today. House Speaker Kraig Paulsen, a Republican from Hiawatha, delivered a sort of status report yesterday afternoon.

“Members in both chambers, members of both parties are working hard to try to figure this out and making excellent progress,” Paulsen said.

But Paulsen admitted there are a few “outstanding” issues to resolve, including some disagreements over abortion policy and spending, and a few more problems may “pop up” today.

“But I believe we’ll get there,” Paulsen said.

Senate Democratic Leader Mike Gronstal of Council Bluffs won’t predict when legislators may complete their work, but he is expressing optimism.

“There are hopeful signs all over the place,” Gronstal told reporters.

Last Thursday Gronstal and Paulsen announced a compromise plan that would cut property taxes and income taxes, but lawmakers have yet to vote on it. 

“We took two plans and merged them together,” Senator Matt McCoy, a Democrat from Des Moines, said late last week. “Sometimes you need to remind people that elections have consequences.”

Senate Republican Leader Bill Dix of Shell Rock said Republicans will vote yes, even though the GOP opposes the Democratic proposal included in the bill will increase a tax credit so more low-income Iowans won’t owe state income taxes.

“(That proposal) troubles myself and a number of members, but we’re still prepared to vote for it in spite of that — recognizing that we need to work in a bipartisan way,” Dix said.

Senator Rob Hogg of Cedar Rapids is among a group of Democrats who intend to vote against the tax plan.

“I’m opposed to the current property tax proposal because it would cost state and local government $3.8 billion in revenue over 10 years,” Hogg said Tuesday. “It’s just way too costly if we don’t have an alternate source of revenue for government to meet our obligations to the people of the state.”

Governor Terry Branstad, a Republican who’s been pressing for commercial property tax reduction since 2010, angrily disputes those numbers.

“This information being put out by the League of Cities is just flat our inaccurate and inappropriate,” Branstad said during his weekly news conference on Monday.

Branstad said under the compromise plan, cities and counties will get almost $400 million in state funds over the next four years to cover lost commercial property tax revenue, plus the plan allows tax assessments on residential property and farmland to rise three percent each year.

Critics point to another section of the plan which creates a new class of property called “multi-residential” for things like apartments and complexes that cater to senior citizens with assisted living and other services. The plan eventually will cut property taxes on “multi-residential” property in half, and city officials say that will be a huge loss for city budgets.