The 2018 Legislature was scheduled to adjourn on Tuesday, April 17 but it won’t happen anytime soon. That’s because another week has gone by and GOP leaders who control both the House and Senate can’t agree on much of anything lately, especially on the budget and taxes.
It’s bad news for Iowans for a couple of reasons. First, Iowa taxpayers have to pay thousands of dollars every day the GOP gridlock continues after the scheduled 100 days. It’s likely the bill for going overtime will be hundreds of thousands of dollars. In a tight budget year, that’s money that should be spent educating our kids or lowering health care costs.
Second, Republican leaders have been meeting behind closed doors with lobbyists for months and Iowans still don’t know what the plan is for the budget and taxes. It’s likely they will roll out the final plan at the last minute and rush to pass the bills without giving Iowans much of a chance to weigh in or understand the consequences massive tax breaks will have on the state budget.
As the session goes in to overtime, here are the three things to watch out for.
Ending the Backfill & Raising Property Taxes
GOP lawmakers are poised to break a promise this year that will lead to higher property taxes for homeowners and farmers. Created when the Legislature passed a huge property tax cut for businesses, the state promised to pay about $152 million each year to “backfill” schools, counties, and cities to make sure the property tax burden wasn’t shifted from corporations to Iowans who own a home or farm.
Local governments have made it clear, their only option if the state ends the backfill is to raise property taxes and make cuts to essential services like police and fire. Since the state budget has been in deficit the last two years, Republicans plan to end those backfill payments in order to balance the state budget and free up additional state money for more tax breaks.
New Tax Giveaways to the Wealthy & Special Interests
GOP leaders have offered up four different tax plans so far this year but little progress has actually been made on the final bill because they are stuck in a game of tug of war. The House GOP wants $1 billion in income tax breaks that overwhelmingly benefit the wealthy while the Senate GOP plan costs even more but gives out hundreds of millions in new tax giveaways to the special interests and corporations. Neither plan will balance the state budget and both will make the state’s budget crisis even worse.
The House tax plan does nothing to rein in the corporate tax giveaways that have grown exponentially in recent years and put the state budget out of balance. The average Iowa family making $60,000 or less would get just $90 under the House bill. However, that same family would end up paying more in property taxes and sales taxes for things like Netflix, Hulu, and on-line purchases. In contrast, millionaires get a new tax break of about $5,400 on average.
Given the state’s budget crisis, Iowans should be skeptical of any new tax deal that costs over $1 billion. We’ve seen the devastating reality of large-scale tax cut plans passed in other states like Kansas and Oklahoma. I think most Iowans would agree that the state should take care of critical needs like public schools and lowering health care costs before another round of tax breaks are approved.
Budget & Debt
In the last two years, the state budget has been in deficit four times and Republican lawmakers have put over $144 million on the state’s credit card because they spent more than the state took in. To balance the budget next year, Governor Reynolds has recommended those credit card payments be delayed next year and paid back another time. If Republicans can’t pay back the debt they borrowed last year, they have no business passing another tax break for the wealthy or special interest.
With Iowa facing a trade war and new tariffs on agricultural products, it’s also important to be fiscally responsible because an economic downturn could make the state’s budget crisis even worse. So far, Republican leaders haven’t developed a plan to keep the state budget in balance in the event of a trade war or a downturn in our economy.
When session began, the Governor and Republican leaders said the state budget was in bad shape and there were few state dollars available for public schools, lowering health care costs, or investing in Iowa’s broken mental health system. It was less than a month ago the Governor signed a bill to chop millions from the state budget.
Today, those same Republican leaders are trying to convince Iowans there is an extra $1 billion in the state budget for another tax giveaway to the wealthy and special interests.
Iowans know Republican leaders at the State Capitol can’t have it both ways. They also understand when a tax break is actually just a tax shift.
Democrats believe it’s time to work together to balance the state budget, restore fiscal discipline, and end the 2018 session.
The sooner this overtime session ends, the better news it will be for Iowans.
Mark Smith, House Democratic Leader