The Ottumwa Courier

May 17, 2013

Mixed reactions to tax reduction

By MARK NEWMAN
Courier staff writer

---- — OTTUMWA — During past public forums in Ottumwa, Sen. Mark Chelgren, R-Ottumwa, told voters the state should follow its own laws and make taxes equal across the board. This week, legislators in Des Moines took a first step toward that goal, which is also a longtime priority of Gov. Terry Branstad.

Iowa legislators reached a compromise deal Thursday on a broad tax reduction package that includes commercial property tax cuts, reported the Associated Press. Lawmakers said the tentative agreement will gradually reduce taxable assessments of commercial properties by 10 percent and provide property tax credits geared for smaller businesses.

On Friday, Chelgren said there were parts of legislation added in that were desired by various Republicans and Democrats. For example, the bill will offer income tax credits to taxpayers, as desired by some Republican leaders, and, he said, also gives the Democrats the increase in earned income tax credit they wanted to provide to individuals with lower incomes.

According to the AP, Senate Majority Leader Mike Gronstal, D-Council Bluffs, said the compromise included something for everyone.

"I think it's government working like it should," said Gronstal. "I'd say everybody gave a little bit and everybody got a little bit."

The bill still must win official approval in the Senate and House. Chelgren said he was optimistic about its chances of being passed. It did not come up for a vote in either chamber Thursday.

"There's been a lot of people that campaigned on property tax relief, and this would be the opportunity to put this in the law," said Rep. Thomas Sands, a Republican from the town of Wapello, who led the House negotiators on the tax reduction effort.

Wapello County Supervisor Greg Kenning said the law may, on the surface, look like a good idea and he knows lawmakers put a lot of work into it, but he worries local bodies, like counties, cities and schools, will end up losing out. For one thing, he said, those local entities are the ones who collect and use most of that money. In the past, officials have suggested making the tax structure fair by slightly increasing residential or farm tax rates, which hover around 45 percent for assessed valuation, compared to 100 percent valuation on commercial and industrial assessment.

But raising residential property tax was almost immediately dismissed as a possibility. The next idea was to have the state of Iowa "back fill" funding decreases to local bodies. Whether that will actually happen is unclear, but Kenning said even if it does, there's not enough back-fill money to do the job for more than a year or two. So while the state will make counties lower property tax, they won't allow them to make up for it in other places.

"I hope, I hope," he emphasized, "that this won't bring disaster for municipalities and schools around the state because they're losing that money."

That may mean spending on services and human resources has to be reduced, Kenning warned.

Still, Chelgren said, even if approved, the new law won't go as far as he wants to see equitable taxation. The state's Constitution says the tax structure is supposed to be fair, he said, and what we have now is not.

"We need to fix some things completely, but I'm not going to vote against a step in the right direction," he said.

There are Republicans who may vote for the law, Chelgren suspects, in the hope of seeing the governor achieve victory on something he'd promised during his campaign.

"I'm not necessarily doing this for the governor," he said. "I want to know if a bill is going to mean progress. And in this case, the answer is 'yes.'"

The Associated Press contributed to this story. To see reporter Mark Newman's Twitter feed, go to @couriermark.