Republicans Promise Tax Cuts This Year; Branstad Balks
With Republicans now in control of the Iowa House and Senate and the governor’s office, the so-called trifecta, enthusiasm for cutting taxes is running high. GOP leaders in both chambers have been telling groups around the state of their hopes and dreams for tax cuts. But so far Governor Branstad is not on board.
Shell Rock Republican Bill Dix became Senate Majority Leader after the GOP put an end to Democratic control in November elections. In a speech to the West Side Conservative Club meeting in Urbandale last month, he recalled voting to cut income taxes back in 1997, the last time Republicans were in charge.
“I was excited about the opportunity to decrease income tax by 15% across the board,” Dix said. “We only got 10% done.”
Now with the GOP again in firm control, simplifying and cutting taxes is on the agenda for both the House and Senate, and leaders in both chambers say everything’s on the table.
In the House, the majority leader says the starting point will be tax cuts they’ve already approved in the past, only to have them die in the Senate.
“You just need to look at my caucus a little bit,” said Republican House Speaker Linda Upmeyer (R-Clear Lake). “Every year we've been interested in addressing taxes.
“It’s who we are,” she adds.
We have to reduce government expenditures
Since the GOP took control of the House in 2011, they have approved bills to enact a flat tax, to apply federal tax cuts to Iowa tax returns, and to cut income taxes by 20%.
Income taxes are a top priority for new Republican Senate President Jack Whitver (R-Ankeny).
“We'll have a balanced budget his year and we'll do that in the process of cutting income taxes,” Whitver said at a Greater Des Moines Partnership legislative forum in December.
Whitver says voters sent a clear message that they feel overtaxed.
But the new Senate minority leader says he’s not hearing that message.
Somebody has to pay taxes in this state
“Here are the tax increases I voted for,” said Sen. Rob Hogg (D-Cedar Rapids). “Cigarette tax. I haven't heard anyone talking about undoing that. I voted for the gas tax increase. I have not heard that that's why people are feeling overtaxed.”
Hogg warns against tax cuts of the kind enacted in Kansas, which is now struggling with massive budget deficits.
“Don’t let them fool you when they say we don't want to do what Kansas did,” Dix replied. “Kansas at the same time they reduced their income tax had double digit spending growth.
“We’re not going to do that,” Dix said. “We have to reduce government expenditures.”
Another skeptic is Sen. Joe Bolkcom (D-Iowa City).
Under Democratic control he led the tax-writing Ways and Means committee where House-passed tax cuts went to die.
“We can't all be Donald Trump,” Bolkcom said. “Someone has to pay taxes in this state.”
Bolkcom was elected to the legislature in 1998, in time to begin to observe the effects of the earlier GOP tax cuts.
“I think it began the downward trend of support for education in Iowa,” Bolkcom said.
Bolkcom says any major tax cuts this year seem unlikely because of slow growth in the Iowa economy and resulting shortfalls in state tax receipts.
Governor Branstad’s Department of Management Director Dave Roederer agrees.
“It will be a challenge,” Roederer said.
Roederer made his comments after news broke that a $100 million cut is needed in this year’s budget because of sluggish tax receipts.
Governor Branstad is looking at the same numbers.
Tax cuts won’t be part of the budget he unveils next week.
I plan on holding the majority for a while
“At this time I’m not making a recommendation for major tax reform this year,” Branstad said.
But it’s not for lack of interest.
Branstad says he and his advisors have studied various options for restructuring and reducing taxes, and so far haven’t settled on anything the state can afford.
Branstad applauds the long-ago tax cuts of 1997.
“Those are significant accomplishments that we are proud of,” Branstad said. “But that was a different economic time and the state had a significant surplus.”
Even though there’s pent-up GOP desire for cutting taxes, one top Republican warns against going too far too fast.
“We’re not going to do every single one of them,” said House Majority Leader Chris Hagenow (R-Windsor Heights). “Although we should govern like this is our shot, I plan on being around for a while and holding the majority for a while and we can do some things the next year too.”
“I think it can be done in future years with a better economy,” Branstad said.