The chairman of the committee in the state senate that drafts tax state policy says Governor Terry Branstad is trying to push through a $37 million tax break for businesses that senators reviewed but did not approve two years ago.
“He’s making an end run around 150 legislators who, at this point, have not come to consensus on whether or not in fact we ought to approve this policy,” says Senator Joe Bolkcom, a Democrat from Iowa City who is chairman of the Senate Ways and Means Committee.
Bolkcom says the governor is abusing executive power by having the proposal drafted as an administrative rule and implemented by his state agency.
“This governor has been around so long he thinks that he gets to make all the decisions and this is just another example,” Bolkcom says. “Earlier this year he closed two Mental Health Institutes. A year and a half ago he closed the Juvenile Home for girls. He shut down 60 Workforce Development centers. All of those things illegal, but he believes that he has absolute power at this point.”
Bolkcom says the move is also suspect because Branstad item vetoed millions of dollars worth of state spending for schools in July.
“Three months later we apparently are flush with money and are able to give another major corporate tax cut,” Bolkcom says.
The proposal deals with “consumable supplies” that are used in the manufacturing process, like hydraulic fluids and drill bits. Branstad’s Department of Revenue is proposing an administrative rule that would exclude “consumable supplies” from the state sales tax. It’s an estimated savings of $37 million for Iowa businesses. Branstad describes it as a way to “modernize” the tax code. A bill that would have achieved the same goal passed the Republican-led Iowa House in 2013, but stalled in the Iowa Senate, where Democrats control the debate agenda. A legislative committee reviews all administrative rules and could block the proposal.