A top Iowa lawmaker says Senate Republicans are developing a tax package that may include a sales tax increase to fund water quality efforts and outdoor recreation.
Iowans voted in 2010 to approve a three-eighths of one cent sales tax increase for what is now called Iowa’s Water and Land Legacy, or IWILL, but lawmakers haven’t enacted the tax increase to fund the initiative.
At an event Thursday hosted by the Greater Des Moines Partnership, which announced funding IWILL as a top policy priority, legislative leaders were asked about its prospects in 2020.
Senate Majority Leader Jack Whitver, R-Ankeny, said Republican senators have been discussing this issue ahead of the legislative session that is scheduled to start January 13. But he said he is considering it as part of a broader package of tax changes.
“That bigger bill would have to be a tax reduction,” Whitver said. “We’re not going to go through a tax increase, I’m confident of that.”
Whitver added he is looking at cutting income taxes to try to offset the sales tax increase.
Republicans passed income tax cuts in 2018, and they have not been fully phased in. The 2018 tax law says state revenue has to hit certain growth targets for more income tax cuts to kick in.
Whitver said Republicans are also considering changes to the formula that dictates how IWILL funding is to be allocated.
Senate Minority Leader Janet Petersen, D-Des Moines, said Senate Democrats have supported IWILL, but she is waiting to see the details of Republican proposals.
“We understand negotiations are going on behind closed doors that would impact what the formula may or may not be, and until we have a chance to see what that might look like and what it would be like as far as an overall tax package, I’m hesitant to say whether or not Democrats will support it,” Petersen said.
Republican Gov. Kim Reynolds recently told reporters she has been meeting with stakeholders to see if a compromise is possible on this issue. Some have floated the idea of a one-cent sales tax increase that would include IWILL and mental health funding.
“If we do the three-eighths and take a look at the five-eighths, how can we ultimately put more money in taxpayers’ pockets?” Reynolds said. “So is there an opportunity there to see an overall tax reduction while improving water quality and the quality of life?”
Reynolds also said she will not propose such a tax increase if it becomes clear that it doesn’t have support from key lawmakers.