Barely 40 Hours After Passage of Local Option Tax Repeal, “Must Do” Legislation Contains First Diversion

April 24, 2008 @ 12:00 AM

MUSCATINE, IA. - Edward Failor, Jr., Executive Vice President of Iowans for Tax Relief, today lamented the fact it took the Legislature barely 40 hours to begin the process of scooping resources from the newly created statewide pool for school infrastructure.  Failor said, "The Governor hasn't even signed the legislation to take away Iowans' right to vote on the local option tax for school infrastructure and yet new legislation surfaces to exempt two of the biggest sales tax rich counties from the statewide pool for five years."

          House File 2663 passed the Iowa Senate Tuesday, April 22 and cleared the last hurdle to the Governor's desk for a signature.  Iowans for Tax Relief vigorously opposed HF2663 because it took away the right of voters to approve the tax, increased taxes on Iowa businesses by roughly $40 million, AND, put these funds in a statewide pool that is at serious risk for scoops, raids, and diversions.

          House Study Bill 797 was introduced today and includes a provision to divert the sales tax dollars from Johnson and Linn Counties from the statewide pool for the next five years.  This bill is commonly referred to as the Standings Bill and it is the session ending catch-all legislation that is considered a "must do" prior to the end of Session.  This means millions of dollars designated in HF2663 for inclusion in the statewide pool will not be available for distribution to other school districts through the equity formula for five years.

          Failor said, "This is a scoop and diversion without any question.  While rural school superintendents sat in the Senate Chamber watching HF2663 pass the Senate and assumed all the dollars would be shared statewide, politicians in the back room were crafting the first huge scoop of these dollars and diverting them from the statewide pool.  We thought it might take 12 months to witness the first evidence of the bait and switch, but it barely took two days."

          "What can Iowans expect but more of these raids as politicians look for resources to feed the appetite of the special interest lobbyists who crowd the Capitol Rotunda?  They can expect the school children and taxpayers of Iowa will be shortchanged as large portions of this $400 million monster fund are diverted to other uses and priorities," concluded Failor.