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January 28th, 2011

Branstad Sets The Right Tone But Tax Increase Will Be A Tough Sell

By Craig Robinson

In many ways, Governor Terry Branstad’s speech to a joint session of the legislature yesterday was what you would expect when you meet with your financial planner for the first time.  After looking over your income and expenditure statements, the financial planner then tells you it’s time to get serious and commit to using a practical budget.

Branstad set a strong tone early when he said,  “I stand before you to present the state’s budget for the next two years. But, at the risk of sounding a bit like the grandfather I am now, I think we need to start with a stern talking to.”

For days, Branstad and his team have used the phrase, “austere and somewhat painful” to describe his proposed budget.  After seeing the Governor’s proposal, it’s easy to understand why he has used that term.  Just like a meeting with a financial planner, there isn’t a lot of fun stuff to get excited about.

Here are some of the highlights.

Branstad’s budget isn’t full of the gimmicks that hide spending from the public.  There were 89 programs that were funded by one-time dollars totaling $770 million of spending.  Branstad put those expenditures back into the state’s general fund even though Governor Culver didn’t include those dollars in his budgets.

Branstad’s budget holds school spending at the current levels, with no decreases, and puts an end to underfunding the state’s commitment to schools, which has lead to property tax increases.  Schools and Democrats are going to howl about not getting an allowable growth increase, but Branstad is smart to make them live with what they have for the next couple years.

All told, Branstad’s proposed budget makes the tough decisions today, so that expenditures can get into line with state revenues in future years.  For the past 12 years, Governor Vilsack and Governor Culver would always came into the chamber to deliver promises of state resources, Obviously, those days are over.

Branstad also proposed cutting corporate taxes to a flat six percent, while also maintaining federal deductibility.  The plan would not only make Iowa competitive with its neighboring states, but it also might give the state an edge in attracting new businesses.

The only problem is that there is just one catch.  To fund the $200 million price tag of the corporate tax cuts, Branstad has to find the money from another source.  To fund the proposal, Branstad proposed restoring the gaming tax to the level at which it was originally contemplated years ago.

That’s a nice way to say that he is going to increase the taxes on casinos by a whopping 63 percent.  Any industry would be severely crippled by a tax increase of that magnitude.  The Republican legislators, who ran on reduced spending, not tax increases, are going to be a tough sell for the administration.

Governor Branstad set the right tone in his budget address, but his reliance on a tax increase could sink his corporate tax overhaul.

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About the Author

Craig Robinson
Craig Robinson is the founder and editor-in-chief of TheIowaRepublican.com, a political news and commentary site he launched in March of 2009. Robinson’s political analysis is respected across party lines, which has allowed him to build a good rapport with journalist across the country. Robinson has also been featured on Iowa Public Television’s Iowa Press, ABC’s This Week, and other local television and radio programs. Campaign’s & Elections Magazine recognized Robinson as one of the top influencers of the 2012 Iowa Caucuses. A 2013 Politico article sited Robinson and TheIowaRepublican.com as the “premier example” of Republican operatives across the country starting up their own political news sites. His website has been repeatedly praised as the best political blog in Iowa by the Washington Post, and in January of 2015, Politico included him on the list of local reporters that matter in the early presidential states. Robinson got his first taste of Iowa politics in 1999 while serving as Steve Forbes’ southeast Iowa field coordinator where he was responsible for organizing 27 Iowa counties. In 2007, Robinson served as the Political Director of the Republican Party of Iowa where he was responsible for organizing the 2007 Iowa Straw Poll and the 2008 First-in-the-Nation Iowa Caucuses. Following the caucuses, he created his own political news and commentary site, TheIowaRepublcian.com. Robinson is also the President of Global Intermediate, a national mail and political communications firm with offices in West Des Moines, Iowa, and Washington, D.C. Robinson utilizes his fundraising and communications background to service Global’s growing client roster with digital and print marketing. Robinson is a native of Goose Lake, Iowa, and a 1999 graduate of St. Ambrose University in Davenport, where he earned degrees in history and political science. Robinson lives in Ankeny, Iowa, with his wife, Amanda, and son, Luke. He is an active member of the Lutheran Church of Hope.




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