Governor Tom Vilsack today signed into law the new state economic development fund he first called for in January, but he used his item veto authority to reject the 310-million dollar income tax cut Republican legislators wanted. Vilsack has set a goal of creating 50-thousand new jobs in Iowa over the next four years — as an outgrowth of the investments made by the “Iowa Values” fund. Vilsack says a “new era” in state economic development efforts has begun. Vilsack says he nixed the income tax cut because it would have caused 310-million dollars worth of cuts in “essential services” like education. Another section of the bill was cut out, too. Vilsack says he cannot accept the legislature’s proposals for reform of the way on-the-job injury claims and other court cases are handled. Vilsack says he’s been elected Governor to stand up for the people who have no voice, and that’s why he knocked down those provisions. Vilsack is choosing to focus on creation of the “Iowa Values” fund and resisted talking about how his decisions may harm his working relationship with Republican legislators.Republican lawmakers say the state’s economy would have gotten a bigger jolt from the tax cuts and regulatory reforms Vilsack rejected. Republican lawmakers plan to sue Vilsack, challenging his use of the item veto on a bill they thought, by law, he had to either sign or veto in its entirety. House Speaker Christopher Rants, a Republican from Sioux City. Rants says the Governor has “cast a long shadow over future legislation” and legislators have “no choice” but to defend their authority as a separate branch of government. Rants contends Vilsack, by his actions, has actually raised Iowans’ income taxes. Rants says the bill made changes in Iowa tax law to react to changes made at the federal level, and because Vilsack axed all the income tax changes, he says Iowans will collectively pay 40-million dollars more in income taxes next year. Senator Jeff Lamberti, a Republican from Ankeny, says the only historic thing about today was that the Governor missed a big opportunity to transform the economy through tax cuts and business reforms. Lamberti says transforming the economy requires more than tax, and that’s really all the Governor left in the bill after he item vetoed out the provisions of income taxes and regulatory reform. Lamberti says no state has turned its economy around by merely handing out money to businesses.
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