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'The Watchdog'

Building a Budget

posted on March 1, 2019

Building a Budget

This week, Senate Republicans released their budget targets for FY 2020. The proposed budget of $7.619 billion is the same as FY 2019 and is $48 million less than the House and $39 million less than the Governor.

Senate Majority Leader Jack Whitver told the Cedar Rapids Gazette that because nearly $250 million in one-time expenses came off the books, they were able to construct a budget plan that would boost spending for public education by $128.6 million, healthcare by $106 million, and public safety by $14.5 million, with plans for nearly $39 million in tax relief — most of which would come from eliminating the inheritance tax.

The House Republican budget plan would spend $7.668 billion, a 0.63 percent increase over FY 2019.  Rep. Pat Grassley said, “This is a conservative, responsible budget plan that funds our priorities, limits spending, and puts taxpayers first. We have listened to Iowans, and this approach allows us to invest in key priorities that they support like education, career training, healthcare, and public safety.”

Governor Kim Reynolds proposed a $7.658 billion budget, a 0.5 percent increase over last year. Her plan prioritizes spending for schools, mental health, and the workforce development program.

Next week, the three-member state Revenue Estimating Conference will release an updated estimate of state tax receipts. The legislature is required to use the lower of either the December or March estimates when crafting the 2020 budget. Each of the three plans released would spend less than the 99 percent ceiling set by Iowa law.

Dependence on Federal Funds

Iowans for Tax Relief gives taxpayers a voice so they can be empowered with economic freedom: Less government spending. Lower taxes. Limited regulations.

Sometimes the solutions to these issues are obvious, like reducing tax rates. But some hurdles to economic freedom are harder to see…so much so that even legislators may be unaware of them.

For instance, did you know that the State of Iowa received $8.5 billion from the federal government in 2017, an amount that eclipses our current state budget of $7.5 billion? Roughly half of the money flowing through Iowa isn’t even funded with state income or sales tax at all; it’s funded with federal money that often comes with strings attached.

This means even fiscally-conservative legislators who are trying to keep spending in check and return dollars to the taxpayers are stymied because so much of our budget must be used to match funds from federal programs.

This week Rep. Pat Grassley, who chairs the House Appropriations Committee and is responsible for setting the House’s budget proposal, introduced HSB 205. This bill would require all state departments to submit a federal funds inventory.

State agencies and departments would have to report not just how much federal money was received, but what strings were attached to it: how many matching state dollars were required, how many full-time employees had to be hired, and what other obligations were incurred by the agency in order to accept those federal funds.

The bill also would require identifying a potential or foreseeable end date for each federal grant. This would allow our state to understand and plan for the time when each set of federal dollars may no longer be coming to Iowa.

Federal funds inventories already exist in Utah, Idaho, Mississippi, and Indiana. Our neighbors in Nebraska are advancing legislation to track federal funding programs in that state, too. ITR supports Rep. Grassley’s introduction of  HSB 205 and the creation of a federal funds inventory in Iowa.

It is critical that everyone has a clear picture of just how reliant Iowa is on federal money. Our legislators especially need this information when budgeting how to spend taxpayer money. There’s no such thing as a free lunch, and there’s certainly no such thing as free money.

Super-Majority for Tax Increases

An amendment to the Iowa Constitution has been introduced in the Iowa Senate that would require a super-majority vote for increasing income taxes.

SJR 16 would require any new income tax increase to be approved by at least two-thirds of both chambers of the legislature and approved by the Governor.

Iowa has high income tax rates, and a two-thirds vote requirement is an additional protection against tax increases. Individuals, families, and businesses in Iowa deserve to keep more of their hard-earned income. High income taxes also punish productivity and are harmful for economic growth.

A subcommittee has been scheduled on Monday for this bill.

Occupational Licensing

HSB 180, an occupational licensing reform bill, passed out of an Iowa House subcommittee this week.  This bill requires the State Government Efficiency Review Committee to evaluate all occupational licenses in the state every six years, helping to ensure that occupational licensing isn’t excessive or overly burdensome.

Occupational licensing can act as reasonable health and safety measure imposed by the state, but noisy special interests can also use it as a protectionary mechanism to reduce competition and line their own pockets. Cutting this bureaucratic red tape, which ITR views as a “hidden tax,” can lead to more jobs, improved entrepreneurial opportunities, reduced prices, and increased incomes for everyday Iowans.

ITR applauds Rep. Deyoe for his efforts to draft and advance this legislation.

Iowans Agree: Property Taxes are Too High

It doesn’t matter who asks the question, the answer is the same: property taxes are too high.

A recent Des Moines Register/Mediacom Iowa Poll shows this opinion is shared by most demographic groups as well as Democrats, Independents, and Republicans. This confirms a statewide public opinion survey ITR conducted in January.

Legislators in both chambers have indicated property tax reform is a priority this year. The Iowa House Republicans recently released their property tax reform bill that creates a city and county budget limit.

Iowans Deserve Property Tax Relief

Excerpt from The Gazette and Quad-City Times, February 17th and 21st respectively

“In 1934, Iowa enacted the first sales and income taxes to provide property tax relief. Today, nearly a century later, Iowa taxpayers still face the challenge of high property taxes.

Between 2000 and 2017, Iowa property taxes increased by more than 100 percent, according to research from Iowans for Tax Relief. This increase is more than inflation and population (56 percent), Social Security cost of living adjustments (46 percent), and the growth of the state general fund (60 percent). The American Legislative Exchange Council’s “Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index” exposes Iowa’s property tax burden as the 16th highest in the nation. Concern about the reality of these escalating property tax bills supersedes the urban-rural divide and impacts all Iowans.

The best method to provide long-term property tax relief is to stop the overspending at the local level through a property tax cap and establish a strong truth in taxation measure.”

Article written by Jonathan Williams and John Hendrickson
Posted on www.alec.org February 22, 2019

Cedar Rapids Business and Taxpayer Roundtable

At a roundtable hosted by ITR and NFIB-Iowa, Representative Ashley Hinson and Senator Dan Zumbach talked about:

  • Property Taxes
  • Inheritance Taxes
  • Tax Credits
  • Government Spending
  • Education
  • Ag Economy
  • Job Creation
  • Regulations

Here are some of their comments:

“We want to just remove the inheritance tax. It is your property; do with it what you want.”

“When you are trying to add a tax credit here, a tax credit there, and fix something over here, it is a sure-fire sign that your tax code it too complicated. The ultimate goal is to eliminate the need for tax credits because tax rates will be low enough.”

“Cities and counties play games with levy rates and assessments. We need more transparency.”

“We are trying to get rid of the capital gains tax. Just because you did well, should you be punished for it?” 

Taxpayer Comments

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