At long last, the property tax reform that Governor Branstad campaigned on in 2010 and every candidate, on both sides of the aisle, advocated for in 2012 is about to become reality. That is, as long as it passes the Democrat-controlled Iowa Senate. A sweeping tax reform package that legislators believe will provide the biggest tax cut in state history appeared on the verge of passing Thursday night.
However, Iowa Senate Democrats did not take up the measure on the floor. It was expected they would do so when the session reconvenes Friday morning. However, the word among state senators late Thursday night was that the bill might not be voted on this week. Senate Majority Leader Mike Gronstal (D-Council Bluffs) stands in the way of this significant piece of legislation.
“As you know, we’ve been working on this very diligently for three years,” Branstad told reporters on Thursday. “This is a good example of everybody really working together to try to get something that’s going to make a real difference to make the state more competitive and reduce the property tax burden for the citizens of Iowa.”
The comprehensive package includes elements that the Republican-led Iowa House, Democrat-led Iowa Senate and Republican Governor Terry Branstad advocated for.
“The conference committee has passed both chambers and is agreed upon. I am hopeful that Senator Gronstal will bring it to the floor tomorrow for a full vote,” said Sen. Jack Whitver (R-Ankeny). “This bill will be the largest tax reduction in Iowa history and includes relief for commercial property, residential property, apartments and an income tax reduction. This is the type of pro-growth legislation that will continue to move the Iowa economy towards number one in the country.”
There are several different aspects of the bill, which will impact various groups of Iowans. The legislation will reduce commercial property tax rates by 10 percent, over two years. It will also create a new tax credit for commercial property owners.
The Earned Income Tax Credit, a benefit to low income Iowans, will increase significantly. There will also be a new tax credit of around $60 per year for income tax payers. The legislation also lowers the cap on annual increases in residential and agricultural property tax assessments.
“I am hopeful that the bill will go through. Part of the process is negotiations, sitting down and in good faith try to reach a compromise the all parties can agree to,” said Sen. Jake Chapman (R-Adel). “While I don’t think it is a perfect property tax relief bill, it will be the largest tax cut in Iowa history and will put Iowa on a more level playing field to attract and retain business.”
If the bill is taken up by the Iowa Senate and receives majority support, it will be sent over to the Iowa House. Following passage from both chambers, Governor Branstad says he will enact the tax reform legislation.
“I’m looking forward to the opportunity to sign it. Obviously, it’s been a high priority of mine since I came back as governor and I think it will make a big difference for our state,” Branstad said.
Although this legislation is expected to provide significant tax relief, it does not meet all the reforms Republicans hoped for. They originally pushed for a $375 per taxpayer income tax credit, as a way to repay the over collection of taxes resulting in a $700 million budget surplus.
Local governments are likely to oppose the measure. They will lose revenue if the legislation passes, due to the property tax reductions.
“I’m hopeful we can do more in future years but I think this is the art of what was possible with this General Assembly and I’m very appreciate of the cooperation and that everybody’s worked together,” Governor Branstad added.
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