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Iowa Republicans haven’t agreed on state budget, tax cuts

April 8, 2018

DES MOINES, Iowa (AP) — Iowa lawmakers are supposed to be rounding the last corner of the legislative session as an unofficial adjournment date approaches, but Republicans who control the Legislature haven’t finalized key steps including approving a state budget or explaining how they’ll deliver promised tax cuts.

Republican leaders have been working privately to come up with spending targets that lawmakers will use to craft the next state budget. Legislative leaders indicated Thursday they were close on dollar figures.

“We’re not focused on artificial deadlines,” said Senate President Charles Schneider, a West Des Moines Republican who also chairs a key budget committee. “We’re focused on making sure we have a fiscally responsible budget.”

It’s unclear how long lawmakers will remain at the Capitol. Their reimbursement for daily expenses ends April 17, and that’s traditionally the target for concluding the session. This year, many legislators are eager to hit the campaign trail for midterm elections.

Rep. Chris Hall, a Sioux City Democrat and ranking member of the House’s top budget committee, worried key decisions could happen too quickly.

“If all of these negotiations are taking place behind closed doors, and there’s not an opportunity for the minority party to have input, or for the public to comment on why they believe certain things should be reflected in the state budget, it seems ripe for mistakes,” he said.

Lawmakers approved, after mid-year cuts, a roughly $7.2 billion budget for the spending year that ends in June. A budget forecasting panel recently predicted the state was on pace to have about $7.5 billion for the budget that begins July 1.

What the Legislature will do with that anticipated increased revenue remains unclear. Republicans have long promised changes to Iowa’s tax system, including tax cuts.

For people like Iowa State University senior Cody Smith, tax cuts make no sense. Reynolds approved more than $35 million in mid-year budget reductions last month. Last session, lawmakers approved about $118 million in cuts to the fiscal year 2017 budget. The state also borrowed $141 million from emergency funds last year.

The Iowa Board of Regents, which oversees the state’s three public universities, announced last week it would raise tuition because of declining state funding. Smith said the Legislature’s reduced funding makes higher education less affordable, leading many to leave Iowa for other opportunities.

“It’s just an unsustainable cycle,” he said.

Jason Bardsley, a state patrol trooper in western Iowa, said tight budgets already mean the state has as few as five officers on duty overnight. He said the state should work to replenish staffing levels.

“I don’t want to see our department get to a point where we cannot effectively assist the public in the state of Iowa,” said Bardsley, president of the State Police Officers Council, which represents state law enforcement officers. “I think we’re pretty much at the crossroads right now.”

On Monday, lawmakers will hold a public hearing on Gov. Kim Reynolds’ plan to cut personal income taxes. The plan was announced in February but a final version still isn’t available.

Reynolds and other Republicans also have said they would consider cutting corporate tax rates.

Schneider told a key Senate budget committee Thursday that targets for the state budget weren’t ready.

“We’ll see something as soon as we can get it done,” he said.

Amid the budget talk, local officials are closely watching Republican proposals to reduce or eliminate “backfill” payments to local governments. Those payments, which total $152 million a year, replace lost funding from the Legislature’s 2013 tax cuts for commercial and industrial property owners.

Sioux City’s backfill payments, for example, amounted to just under $2 million this fiscal year. Mayor Bob Scott said that translates to about two dozen police officers and firefighters. He said communities haven’t yet seen the growth lawmakers promised when they approved the tax cuts in 2013.

“They’re going to do tax cuts to make themselves look good, even though it means the cities are going to raise the taxes on people who aren’t getting tax cuts,” he said.

Rep. Pat Grassley, a New Harford Republican who helped advance a bill to reduce backfill payments, said the issue isn’t tied to this year’s proposed tax cuts. But, Grassley said, the state can’t afford to keep funneling more money into local coffers.

“The state will never have enough money to be able to fully fund state and local governments,” he said.

Another possible thorn in state budget talks is an escalating dispute between the United States and China. The countries are in a back-and-forth over tariffs on products like soybeans, pork and ethanol. Reynolds indicated her staff was tracking the possible impact to Iowa’s budget priorities if the state’s agricultural industry faces a risk of significant losses.

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