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You are here: Home / News / Gas tax hike, property tax cut & tax credit for low-income advance

Gas tax hike, property tax cut & tax credit for low-income advance

February 8, 2012 By O. Kay Henderson

Three different tax proposals advanced at the statehouse today, although future prospects for all three are uncertain.

Two of the proposals would cut income and property taxes for some Iowans, while the other would raise the state’s gas tax. A three-member subcommittee in the Iowa Senate signed off on a 10-cent hike in the gas tax. Senator Tom Rielly, a Democrat from Oskaloosa, is the key architect of the plan.

“I think it should be pointed out that anytime we talk about any fee increase, it’s a last resort and I am convinced that we are at that last resort,” Rielly said this afternoon.

Officials estimate current state gas tax collections are falling $215 million dollars short of what’s needed to fix and build roads and bridges in the state. Senator Rielly suggested there’s nowhere left to cut in the DOT’s budget to find that kind of extra cash.

“Since 2002, we have 750 fewer employees (in the DOT). We have turned over almost 800 miles of roads to cities ad counties. We have closed 40 maintenance garages and engineering offices,” Rielly said. “That freed up about $45 million.”

Senator Tim Kapucian, a Republican from Keystone, signed-off on the proposal which would raise the gas tax five-cents on January 1st, 2013 and by another nickel on January 1st of 2014. Kapucian said many roads and bridges in rural Iowa are “dilapidated.”

“I live between a couple of small towns in eastern Iowa,” Kapucian said, “and the bridges that go in and out of that town where there are millions of grain stored, we cannot legally get those trucks back out to Highway 30, down to Cedar Rapids or Eddyville — wherever it’s going.”

With increasing grain yields and heavier farm equipment, Kapucian said the quality of rural roads is crucial to get that grain to market.

“We have more and more corn being produced off every acre every year, the soybeans — we just have to have an infrastructure to be able to compete worldwide and help feed the world and that’s one of the reasons why, as much as I do not like a tax increase, I feel it’s imperative,” Kapucian sai. “We have to take a look at this at this time.”

Senator Matt McCoy, a Democrat from Des Moines, is the third co-signer who helped the proposal clear a subcommittee this afternoon.

“We’re the third worst state in the nation in terms of bridge deficiencies and in the state of Iowa we’ve got a multi-billion dollar problem and kicking the can down the road is no longer an option,” McCoy said. 

Increasing the state gas tax by a dime over the next two years would raise an additional $220 million for the state’s road fund.

As for those other tax proposals, the Senate Ways and Means Committee this afternoon approved a bill that would increase a tax break for low income Iowans who qualify for the federal “Earned Income Tax Credit.” Republican Governor Terry Branstad vetoed a similar proposal twice last year, but Senator Joe Bolkcom, a Democrat from Iowa City, is hoping the third time’s a charm.

“And get a much-needed tax cut to people that can really use the help,” Bolkcom said. Most Iowa families with an annual income of $45,000 or less qualify for the Earned Income Tax Credit, and the proposal now pending in the senate would almost double the state credit for those households.

The third tax-related proposal considered at the statehouse Wednesday deals with cutting commercial property taxes. House Republicans have made some adjustments in their plan. Representative Tom Sands of Wapello says they’ve abandoned one of Republican Governor Branstad’s ideas on the subject that was intended to address some of the objections from cities and counties.

“I think they have some valid concerns and we tried to address them and listen to them,” Sands says. “But every time we tried to meet that, they come up with a different concern or the same concern that that one won’t work.”

The mayors from Iowa’s 10 largest cities held a news conference at the statehouse earlier today to say cities need “more, not less” tax revenue.  Republicans on the House Ways and Means Committee voted this evening to approve the GOP’s latest version of commercial property tax reform.

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Filed Under: News, Politics / Govt Tagged With: Democratic Party, Legislature, Taxes, Terry Branstad

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