The state’s “Taxpayer Relief Fund” has grown from $74 million two years ago to more than $1 billion this fall and the latest newsletter from Iowa House Republicans says there’s no “valid reason” that money should not be returned to taxpayers.
There’s more than $800 million in two other state funds designed to respond to emergencies and last spring, Democrats in the legislature called for spending some of that money on pandemic relief and they’ve argued for more state spending on education. Republican House Speaker Pat Grassley says the GOP approved a state budget that provided the highest amount of funding ever for broadband, with more money to K-through-12 schools and public safety, all while accumulating what amounts to a billion dollars extra.
“We continue to fund the priorities that we hear from Iowans, but also we hear from Iowans that if there is an overpayment — which I look at this as an overpayment — we need to figure out how we get that back in the hands of Iowans, so they can get that back in the economy,” Grassley says.
The Taxpayer Relief Fund was created in 2019, so all state tax revenue that’s over and above the official projections set by a three-member state panel is deposited in the fund. Grassley says its exponential growth shows Iowa’s economy is resurgent.
“Our economy has really been strong here in this state,” Grassley says. “You go anywhere, people are hiring. People are buying.”
Governor kim Reynolds and the Republican leader in the Iowa Senate have said their long-term goal is to eliminate the state income tax. Grassley, the top Republican in the House, agrees.
“I don’t think that there’s any elected Republican in our caucus that would say: ‘Oh, no we don’t want to work to get the state’s income tax as low as we can,'” Grassley says. “Obviously, the ultimate goal would be zero.”
Democratic leaders in the legislature say tax cuts should benefit working Iowans. In 2011, the legislature created a Taxpayer Trust Fund for up to $60 million in unexpected state tax revenue every year. The fund originally provided state income tax credits, but was changed three years ago so all state tax collections that exceeded expectations have been deposited in the renamed Taxpayer Relief Fund.