Iowa business leaders say they fear the $6.3 billion budget the Iowa legislature approved over the weekend will lead to a tax hike. Lawmakers adjourned on Sunday after adopting a state spending plan that includes $500-million in federal stimulus money.
The president of the Iowa Taxpayers Association, Ed Wallace, says he worries that one-time money is setting the state up for a fall next year. "We know at some juncture, the economy hopefully will turn around but we don’t know if it’s going to be in the next one or two fiscal cycles," Wallace said.
"Because we know that we’ve got a $927-million hole moving forward, the question is how do we fill that in and do it in a way that doesn’t increase taxes on the business community as well as individuals."
But, Victor Elias, a senior policy associate with the Iowa Child and Family Policy Center, says the legislature did the right thing by using the federal stimulus money to avoid deep cuts in human services programs. "With the help of stimulus money and their own priorities, we did avoid the shredding of the safety net that’s occurring in many other states with the bad economic situation," Elias said. "We’ve held the line avoiding cuts in the Medicaid program again largely with the help of the stimulus money."
Elias says if the state does face a budget shortfall next year, the legislature should consider rescinding some business tax credits before slashing human services programs. Both Elias and Wallace were guests Monday on the Iowa Public Radio program The Exchange .