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Iowa Politics Roundup: Tax-Credit-Reform Legislation Unveiled PDF Print E-mail
Commentary/Politics - Iowa Politics
Written by Lynn Campbell   
Friday, 12 March 2010 14:19

Democratic lawmakers on Thursday unveiled a long-awaited tax-credit-reform package that they said would reduce Iowa's tax-credit liability by $115 million a year; Republicans and business leaders were quick to criticize the legislation and said it sends the wrong message.

"We have listened to the public's anger at abuses and we are responding with historic reforms," said Senator Joe Bolkcom (D-Iowa City), chair of the Senate Ways & Means Committee. "We are ending some tax credits, cutting many remaining credits, and dramatically increasing accountability for all tax-credit spending."

The unveiling of House Study Bill 738 came two weeks before the targeted March 26 adjournment of the legislature.

The bill would reduce Iowa's tax-credit liability from $525 million to $410 million. It includes suspending the film-tax-credit program for two years, lowering the cap on business tax credits from $185 million to $120 million, cutting in half the supplemental-research-activities tax credit for large corporations, and cutting 10 percent from many other tax-credit programs.

"Every part of the budget is being cut, and that will now include tax credits," said Representative Paul Shomshor (D-Council Bluffs), chair of the House Ways & Means Committee.

House Minority Leader Kraig Paulsen (R-Hiawatha) said it's appropriate to review tax credits and make sure they're doing what they're supposed to. However, he said the bill proposed by Democrats is equivalent to raising taxes.

Business officials were bracing for the bill all session and said they were glad to finally see the legislation. But lawmakers can expect businesses to oppose the bill as it moves through the legislature.

"In this tough economy, when we want to put Iowans back to work, we would not recommend cutting these credits," said John Gilliland, senior vice president for government relations for the Iowa Association of Business & Industry. "You look at other states that are in a similar circumstance with their state budgets, some of those states are being aggressive and increasing the types of credits and incentives to bring jobs to their state. In reality, that's what we'd prefer, looking at being more aggressive rather than retreating."

Judicial Branch and Justice System Could See 600 Job Cuts

Approximately 600 full-time state-government positions would be eliminated in the judicial branch and justice system -- which includes corrections and public safety -- under budgets approved on party-line votes by the House Appropriations Committee.

"There's going to be real cuts, definitely," said Representative Todd Taylor (D-Cedar Rapids), chair of the legislature's joint justice-system budget subcommittee. "These are essential government functions. People say one thing that you have to do is protect the public, and we will do that. We're going to do that by backfilling some of those positions with any dollars that we can find. That's what we did last year with new fees. I think the bottom line is: We are in this budget area taking a hit because of drastic declines in revenues. If that continues to decline, public safety will continue to suffer."

It's unclear how many of those positions reduced will translate to actual layoffs, although Taylor said most would occur in the judicial branch. "There are cutbacks in salaries and mandatory unpaid days that hopefully will prevent layoffs in some of the corrections area," he said. "The courts did have a lot more layoffs and they're not going to have the money to refill many of those positions. So that means more closure days."

A total of 188 people in the Department of Corrections had also applied for early retirement by the end of last week, and the deadline to apply isn't until April 15. Some of those who retire will be replaced with lower-paid employees.

The $484.1-million justice-system budget spends $31.3 million less than this year's budget after an across-the-board cut. It includes a reduction of 367 jobs in corrections, 184 in the judicial branch, and 54 in public safety. "That is a drastic hit," Taylor said. "At the end of the day, it's a lot less people and a lot less money."

A proposal to once again increase court fees remains alive, but was not considered as part of the judicial budget.

Taylor said additional revenue generated by last year's fee increase was offset by the across-the-board budget cut. He said any new court-fee increases this year would probably be made in areas that weren't affected last year.

Branstad Agrees to Three Debates as Opponents Push for More

Former Governor Terry Branstad has agreed to compete in three debates before the June 8 gubernatorial primary election, but the other two Republican candidates are pushing for more.

Republican gubernatorial candidate Bob Vander Plaats called the three debates "a good start" but said he hopes Branstad will agree to others as the campaign progresses.

"We proposed a minimum of four debates, and I do look forward to additional forums in which Terry Branstad, Representative Rod Roberts, and I will discuss the issues of importance to our state and our approaches to governing," Vander Plaats said. "When Representative Roberts accepted our proposal, he suggested adding a debate in Carroll and another in a similar-sized rural community in eastern Iowa. I agree wholeheartedly with his suggestion and will encourage Terry Branstad to join us."

Roberts said he would participate in three primary debates, but renewed his call for at least two additional debates to be held in rural Iowa.

"Rural Iowa is critical to our future as a state," said Roberts, a state representative from Carroll. "To ignore our smaller communities jeopardizes the future of all Iowans."

The first debate will be held April 7 at KTIV in Sioux City; a time has not yet been set for the hour-long debate, and the broadcast will not be live. The second debate will be May 1 in Cedar Rapids and is sponsored by the Iowa Broadcast News Association. The third will be sponsored by The Des Moines Register, which has traditionally joined with KCCI.