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Commentary/Politics - Iowa Politics
Written by Lynn Campbell   
Thursday, 21 April 2011 08:24

Branstad Hints at Veto of Tax Cuts Important to Democrats

Governor Terry Branstad hinted Wednesday that he will veto the portion of the delicately crafted agreement on tax cuts and supplemental spending that was favored by Senate Democrats.

An item veto of a tax cut that would benefit 240,000 low-income Iowa working families is expected to make an already difficult end to the 2011 legislative session even more difficult.

“My general feeling is that the essential parts of Senate File 209 are the supplemental appropriations to correct the lack of action last year, and other issues involving the taxes, I think, are better to be resolved in a bill that deals with taxes, not supplemental appropriations,” Branstad said.

After more than a month of wrangling, the Republican-controlled House and Democrat-controlled Senate on Monday reached agreement on Senate File 209 and sent it to Branstad, a Republican.

The bill contains a Taxpayers Trust Fund important to House Republicans that would be filled with up to $60 million a year; an increase in the earned-income tax credit from 7 percent to 10 percent that is important to Democrats; $45.8 million in supplemental appropriations for indigent defense and other critical areas; and $20 million to eliminate the state’s mental-health waiting list.

But Branstad’s comments Wednesday could put the increase in the earned-income tax credit in jeopardy. The governor said rather than reducing the state’s tax and regulatory burden piecemeal, it would be better to do it in a significant and comprehensive way that includes commercial property-tax relief.

“If the governor has no concern about the working poor in the state of Iowa, I don’t know if that poisons the atmosphere,” said Senate Majority Leader Mike Gronstal (D-Council Bluffs). “I think it’s incredibly disappointing for a quarter-million Iowa working families.”

Senator Joe Bolkcom (D-Iowa City) said Monday that Senate Democrats would be “extremely disappointed” if Branstad were to veto that part of the bill, and it would create a “challenging environment” and a “rugged ending” to the legislative session.

An item veto by Branstad also could put the Taxpayers Trust Fund at risk, although Branstad said Monday that he had reached an accommodation with House Republicans on the issue, and “it’s something that we can live with.”

Senate Democrats also continued to remain at odds Wednesday with both Branstad and House Republicans over school funding. Republicans have proposed zero-percent allowable growth for schools in the 2011-12 school year, while Democrats have proposed 2 percent.

“We are dramatically concerned that the governor proposes a starvation budget for schools for two years,” Gronstal said. “There is no scenario where the Democratic legislature will pass zero allowable growth for two years. That scenario is not going to happen.”

As for compromising, Gronstal said he has tried.

“My caucus has said I’ve offered enough olive branches to start an olive grove,” he said.

House Majority Leader Linda Upmeyer (R-Garner) said what happens with Senate File 209 is key to finding agreement in other areas.

“Issues like this, like 209, have to be put to rest, have to be finished I think before we can complete the work of the legislature,” Upmeyer said.

Senate Democrats, meanwhile, moved forward Wednesday with what they considered a compromise on the state budget, but Branstad quickly shot down the idea.

Under the Senate Democratic plan, which they called a “budget reform compromise,” the legislature would approve a full budget for the upcoming fiscal year but only a 50-percent budget for the following fiscal year. Branstad has insisted on a two-year budget.

“We’ll meet the governor in the middle,” said Senate Appropriations Chair Bob Dvorsky (D-Coralville). “We won’t give the governor a two-year blank check without any public accountability.”

Gronstal said under this plan, the governor still gets part of what he wants in getting a second-year appropriation, but the legislature retains the authority and ability to pass additional appropriations as state agencies justify the need. Gronstal said Senate Democrats believe it’s irresponsible to craft a two-year budget on “pretty shaky numbers.”

But Branstad said he already vetoed one appropriations bill that didn’t meet his criterion for a biennial budget, and he said he intends to insist on a budget sustainable for the long term. The governor said he informed Gronstal that the Senate Democrats’ plan was not acceptable.

“I think we need to have a budget for both fiscal years,” Branstad said. “I inherited a fiscal mess that was created by the last General Assembly and the previous governor where they used one-time money for ongoing expenses and didn’t fund entitlement programs like indigent defense. I promised during the campaign that I would stop that, and we would spend less than we take in each year, that we would have a two-year budget and a five-year projection.”

Senate Democrats began implementing their plan immediately, despite the governor not agreeing to it. They planned to draft an amendment with the 50-percent budget provision for Fiscal Year 2013 that would be tacked on to the administration and regulation budget Wednesday, and to all other budgets as they came through the Senate.

“The House has always said that we support Governor Branstad’s request for a two-year budget,” Upmeyer said. “However, in the end when we come to this kind of a point, I think the discussion has to be between the governor and the Senate.”

It was clear Wednesday that the legislature will not adjourn by April 29 – the 110th day of the session, and the day when lawmakers’ per-diem runs out.

“I’ve never made any commitment to adjourn by the 29th,” Gronstal said.

This summary was compiled from reports by

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