Governor may accept tax cut, pulls part of budget cut

Democrat Governor Tom Vilsack says he may accept a tax cut that benefits businesses if republicans would return in special legislative session soon to reauthorize the state’s “Iowa Values” economic development fund. That fund was nullified by a recent Iowa Supreme Court ruling. Republicans had pressed for tax cuts for individuals as well as allowing businesses to speed up the tax break they get to depreciate the costs of equipment. It means the tax break would be bigger as it’d be spread over fewer years. Vilsack says “there’s plenty of room for compromise.” Vilsack says the business tax break may be a bigger benefit small businesses more than larger ones. Vilsack says he’s willing to consider the tax break because it’s a “one-time” tax break related to the purchase of equipment rather than an ongoing reduction in overall business taxes. Vilsack says he’s put specific proposals on the table for legislators to consider, and is now waiting for lawmakers to respond. On another issue, Vilsack has taken action that will send just over eight million dollars back to state agencies and public schools that saw budgets reduced in October by an across-the-board cut. Vilsack says he’s making the move because the state’s taking in more taxes than had been expected. Vilsack says six months ago, the state’s economic prospects were lower but now the economy’s beginning to pick up and state tax revenues are stronger. Vilsack says it’s prudent to restore some but not all of the money that was cut, because there’s still some uncertainty about how much more tax money the state will collect than was predicted. Vilsack says of the eight million that will be restored, most will go to education. One-and-a-half million will go to the state universities in Ames, Cedar Falls and Iowa City. Community colleges will split about half a million and about 800-thousand dollars will go to boost teacher pay and other education programs. Vilsack expects some schools will deposit the money in their reserve accounts; others may hire an additional teacher. He says the Regents universities may plow the money into economic development programs and the community colleges may boost job training programs. Eight million dollars, though, is a fraction of the state’s four-and-a-half billion dollar budget. Vilsack says it’s a big deal to the teacher who may get their job back or to the community colleges because Vilsack says no other institution in state government does more to stretch a dollar than community colleges. Vilsack made his comments this morning during taping of the Iowa Public Television program “Iowa Press.”