DES MOINES – Iowa Senate Republicans plan to begin work Monday on a comprehensive compromise that has been worked out with Governor Kim Reynolds, which they call the “road to adjournment” for the 2021 overtime meeting.
Senator Dan Dawson, R-Council Bluffs, chairman of the Senate Committee on Ways and Means, said the components of a compromise the governor introduced on Wednesday have now been included in a 26-department Senate study draft abolishing the state Income tax for 2018 included “triggers”, compressing brackets, and reducing rates; let the state take over mental health funding from property taxpayers while “replenishment aid” to local governments is phased out; Expiry of the state inheritance tax; Tax Exemption for COVID-19 Aid; and incorporating various topics related to housing, energy infrastructure, childcare tax credits, parity of telehealth and other topics in a 103-page document with a 31-page explanation.
Dawson is expected to chair a subcommittee on Monday to begin work on Senate Studies Act 1276, a move Sen. Pam Jochum, subcommittee member, D-Dubuque, said, “Has everything but the sink in”.
Senate Republicans have been pushing for changes to tax law throughout the session, starting with a call to accelerate the implementation of state income tax cuts that began three years ago by removing the economic conditions that needed to be met in order to reduce a responsible tax and sustainable system trigger way. They have also pushed for $ 100 million in real estate tax relief as the state gradually pays the cost of providing mental health services to the regionalized system in Iowa, ending the state tax paid on inheritance, and 2013’s commitment to “top-up” local property tax reverses lost revenue due to commercial / industrial price cuts and increasing the government’s share of the K-12 formula for school foundation grants from 87.5 percent to 88.4 percent on July 1.
Earlier this week, Reynolds rolled out a plan that spanned multiple priorities for her and the majority of Republicans, plus $ 400 million in government tax breaks. The Senate Republicans were in favor, but the House Republicans have reservations and propose the House 893 Act as an alternative.
Senate Majority Leader Jack Whitver, R-Ankeny, has halted the process of formulating a budget for fiscal year 2022 – which lawmakers will have to postpone – until Republicans are 32-18 in the Senate and a head start in the Senate by 59 through 41 have The House settled their tax differences, and now a number of other issues have entered SSB1276. This annual meeting should end on April 30th, but now for at least the next week.
House Speaker Pat Grassley, R-New Hartford, said negotiations were ongoing to see “what a way” to find consensus. But Senate Republicans say the House’s more cautious approach leaves too many “really meaningful pieces” out to accept.
“Senate Study Draft 1276 is the only way to get tax breaks for Iowans and a successful completion of the session,” Dawson said Friday. “The house file is a deserted island and will drag out adjournment.”
Both the House and Senate plans are removing the triggers with effect from 2023 and taking steps to remove federal deductibility, compress tax brackets from nine to four, and lower tax rates so that the maximum fee is 6.5 percent amounts to. Other regulations double the childcare eligibility threshold to $ 90,000: Exemption from COVID-19 Aid Grants for Businesses, Farmers, and Workers; State Housing Trust Fund real estate transfer cap increased to $ 7 million; Demand parity for telemedical mental health services; Establish Disaster Recovery Trust Fund and Evacuation Prevention Program; Transition of the existing revolving alternative energy loan program to a revolving energy infrastructure loan program; Extension of the tax credit for the rehabilitation of brownfield sites / gray areas by 10 years until June 2031; Improving the quality job tax credit rating for companies providing childcare services to employees; Enable tax credit allocation between Angel Innovation Fund tax credit programs: and align Iowa with federal tax regulations to allow accelerated depreciation on equipment purchases.
Both versions include, but have different approaches to inheritance tax phasing out, housing tax credits for workers, and tax credits for quality jobs / renewable chemical production. The House’s GOP plan would also provide Iowans with approximately $ 300 million from the Tax Relief Fund through income tax credits.
However, the Senate plan is the only one to get rid of the county’s mental health levies and move the state to take ownership of the funding. eliminates commercial and industrial real estate backfill allowance for local governments; makes changes to the formula for school foundation aid; and covers a variety of topics dealing with a sales tax exemption for grocery banks, downtown loan guarantees, tax credit changes for farmers, changes in capital gains, public education tax abolition and recreation tax, elderly tax credit, transit district hotel / motel deal with tax, extend four income tax audits to 2024, assist manufacturers with skilled modernization investments and other provisions.
“The adjournment stalemate will be broken if the Republicans reach an agreement on tax cuts,” Jochum said. “A budget cannot be finalized until the tax problem is resolved. You have to compromise.
Jochum said she believes the impartial Legislative Services Agency needs to formulate tax notices on every GOP proposal so that lawmakers can make informed decisions.
“Our sales are artificially increased because of the massive amount of federal funding currently flowing into Iowa (and all states). We have to let the dust settle to see where we stand financially, and that won’t be known for another year, “added the Dubuque Democrat. “The House proposal seems feasible, but we need to see the short term and long term fiscal implications to ensure that the state can adequately fund essential services and prepare for future pandemics and epidemics. We know it’s about when, not when. “