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Senate GOP set on approving tax cuts without explaining cost

March 1, 2018

DES MOINES, Iowa (AP) — Iowa Senate Republicans appear set on approving more than $1 billion in annual tax cuts to the state without explaining how they plan to pay for it.

GOP senators have advanced legislation that would include reducing corporate and individual income taxes. The sweeping bill also would eliminate some tax credits, rework sales tax collections and mirror parts of the federal tax system.

Senate Republicans scheduled a floor vote on the bill for Wednesday night, one week after they released the proposal publicly. It would then head to the House, where its future is uncertain. GOP Gov. Kim Reynolds has proposed a separate bill that would cut $1.7 billion in taxes over several years. A House panel is scheduled to review that bill Thursday.

The Senate measure is estimated to cost the state more than $200 million for the budget year that begins in July, according to a new analysis by the nonpartisan Legislative Services Agency. That price tag would rise to more than $1.1 billion annually by 2023.

Senate Republicans have not released information about how they would address possible reductions to areas of state government. Iowa has a current state budget of about $7.2 billion, and it’s faced constraints recently amid lower-than-expected state revenue.

Democrats — in the minority — have questioned how the bill would address that fiscal reality, which has led to spending cuts for state agencies and higher education. The state has also borrowed about $144 million from emergency reserves, and lawmakers plan to pay that back.

“It’s time to responsibly govern, and they show no signs of it with this bill,” said Sen. Joe Bolkcom, an Iowa City Democrat who serves on the tax writing Senate Ways and Means Committee.

The Senate GOP tax bill would cut the state’s top corporate tax rate from 12 percent to 7 percent. The top individual income tax rate would drop from 8.98 percent to 6.3 percent.

Sen. Randy Feenstra, the Hull Republican who authored the bill, said at a meeting last week his legislation is “fiscally responsible.” Feenstra and other Senate Republicans have not provided data to support another claim that cutting taxes will spur economic growth.

Michael Mazerov is a senior fellow at the Center on Budget and Policy Priorities, a nonpartisan research organization. He has studied tax changes in Kansas, where Republicans cut various taxes several years ago, then had to reverse course recently amid sluggish revenue. Mazerov said cutting individual income taxes does “little or nothing to boost state economic growth.”

“There’s no reason to expect the cuts to do anything positive for the economy, based not only on the experience of Kansas but on the experience of other states that have tried the same thing,” he said.

National nonpartisan groups who advocate for open government have questioned the speed at which Republicans in the chamber advanced the bill. The measure had procedural votes about 24 hours after being filed.

Reynolds declined to comment Wednesday on the legislative speed of the bill. She told reporters: “I’m not going to micromanage the Legislature.”

House Republicans, meanwhile, have indicated they’ll work off Reynolds’ bill. That legislation does not yet have a fiscal note from the Legislative Services Agency.

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