Budget and policy experts speaking at a conference in Des Moines say it may be time for the state to raise taxes. Iowa lawmakers are facing a projected shortfall of one billion dollars in revenue when the legislature convenes in January. Governor Chet Culver has said he opposes raising tax during a recession but the project director for a Washington think tank says spending cuts alone won’t solve the problem.
Jon Shure is with the Center on Budget and Policy Priorities. “Over 30 states raised taxes this year — every one of them also cut spending. We’re way past either or solutions here. We need a balanced approach that includes revenue because people’s needs are rising and in this recession states’ ability to meet those needs are going down,” Shure says. Shure advocates a small increase in income taxes on households earning over half-a-million dollars year.
Shure says a few states have raised the income tax on the highest earning households in the state. He says if the state raised the income tax one percent for those making over 500-thousand dollars, it would raise seven billion dollars for the state. But a former advisor to Governor Terry Branstad says to win public support, tax increases must be accompanied by a thorough review of state spending.
David Fisher is a Des Moines businessman who headed up a commission in the 1990’s that resulted in new spending limits for the state.
“You’ve got to get the horse before the cart. You’ve got to show the public that you are restructuring and reducing expenditures and it’s got to be real. It can’t be phony stuff,” Fisher says. Fisher says Iowa lawmakers seem to have forgotten about the spending limitations the legislature approved in the early 90’s that were accompanied by a one cent increase in the sales tax.
Fisher says the public accepted the tax increase because the was a “good housecleaning” of expenditures and costs and that was done and implemented and then they were prepared to look at some tax revenue increases. Fisher and Shure spoke Friday at a conference hosted by the Iowa Fiscal Partnership