Iowa lawmakers have been quibbling over the proper way to reduce commercial property taxes for years and the issue is again at the top of the 2013 Iowa legislature’s agenda.

Republican Governor Terry Branstad considers it his number one priority:  “significant property tax reduction and replacement.”

It’s that last word — replacement — that has Senate Democratic Leader Mike Gronstal of Council Bluffs suggesting a corner may have been turned, as Branstad is making it clear he supports sending state tax dollars to cities and counties — to replace reduced commercial property tax revenue.

“The key for us was that there be reimbursement of local governments because it there isn’t reimbursement, there is a tax shift,” Gronstal says, “and residential picks up the tab.”

House Speaker Kraig Paulsen of Hiawatha, the top-ranking Republican in the legislature, says he’s been careful about what he’s saying in public about the negotiations.

“To see if we can find some opportunities here,” Paulsen says. “I mean I never professed that the House Republican plan was the perfect plan. We obviously like it…but we have a willingness to be flexible, as long as our overall goals are met.”

Gronstal says the details are still being debated in private.

“There’s no deal at this point,” Gronstal says. “There’s a lot of discussion points going on.”

Senate Republican Leader Bill Dix of Shell Rock is pessimistic about prospects for agreement.

“If you’re going to solve problems, you have to listen to people,” Dix says. “I don’t necessarily believe that it’s not possible, but it seems to me in listening to the Senate Democrats, they appear to be more dug in than ever on insisting that the solution lies in a new tax credit.”

Last year Senate Democrats proposed a new property tax credit for small business owners. House Republicans, meanwhile, proposed rolling back property tax rates for all commercial property owners. House Democratic Leader Kevin McCarthy of Des Moines says everyone has to be prepared to compromise.

“I have suggested that we should do something that is modest but meaningful, to get our foot in the door and then maybe have a longer phase-in period over time so that communities can absorb this change,” McCarthy says.

According to McCarthy, the odds are better than 50-50 that the legislature will, finally, take some step toward property tax reform in 2013.

“People have to be willing to take something that is not all they want, but that is politically do-able,” McCarthy says.

The Iowa legislature convenes Monday, January 14.