Lack of agreement on conflicting tax reform proposals continues to push the Iowa Legislature into overtime.
But GOP lawmakers say they’re close on reaching a deal.
“By the end of this week, we should have a fair idea of what’s going to be addressed in the (tax) bill and be able to share that with the public,” said Rep. Shannon Lundgren, R-Peosta.
GOP lawmakers with majorities in both chambers have spent the week negotiating behind closed doors over a tax plan and finalizing a roughly $7.5 billion state budget for the fiscal year that begins July 1.
Disagreement between GOP leaders in the House and Senate over corporate income tax cuts and eliminating federal deductibility in competing plans have stalled closing the session. The Iowa Legislature was set to adjourn April 17, the 100th day of the session.
Lundgren said Republicans lawmakers are taking a “conservative, sustainable approach,” that avoids “unintended consequences” for the state budget, while still putting “money back in the hands of Iowans, because they know how to spend it better.”
Rep. Chuck Isenhart, D-Dubuque, called the status of reaching a tax deal “a black box,” as Democrats, who are in the minority, have been excluded from discussions.
Sen. Pam Jochum, D-Dubuque, ranking member of the tax-writing Senate Ways and Means Committee, said even if Republicans reach an agreement within the next 24 hours, it will take two weeks to shuffle the paperwork between the House and Senate to bring the session to a close.
Gov. Kim Reynolds backed a proposal earlier this year that would cut tax revenue by $1.7 billion over six years, in part by cutting personal income taxes but leaving alone corporate tax rates. The cuts would partially be offset by extra state revenue from the federal tax overhaul. Other changes to the state’s sales and use tax also would play a role.
The plans include revenue targets — or “triggers” — that would act as a safeguard in the event of an economic downturn.
House Republicans have proposed a plan that would cut $1.3 billion over five years, while Senate GOP lawmakers have proposed cuts of $2 billion in tax revenue over roughly the same period.
The proposals come as lawmakers have had to make back-to-back midyear budget cuts due to shortfalls in revenues. As such, Democrats question the timing, as well as which taxpayers would benefit the most from proposed reforms.
“Rather than focusing on improving the wages for working families, making college affordable, protecting our natural resources and investing in our kids, the Republicans are focused on tax breaks that benefit the top 5 percent of income earners, while cutting budgets on the very investments Iowa needs to become more prosperous and build stronger, safer communities,” Jochum said.
However, Sen. Tod Bowman, D-Maquoketa, said the House Republicans’ tax plan would allow working Iowans to keep money saved from federal tax code changes and reduces individual tax rates for all Iowans “in a very fair manner.” It also “addresses the disadvantage that Main Street businesses face from online companies” by seeking to collect new sales taxes from internet sales, he said.
Meanwhile, Lundgren said lawmakers have been busy drafting a proposed Health and Human Services budget that includes provisions of a bill that unanimously passed the House last month but is pending in the Senate.
The bill would require Iowa Medicaid managed care organizations to pay providers within timelines specified under contract and to provide reasons for their denials of claims.
She said the draft budget bill would also increase reimbursement rates for higher tiers of care from Medicaid providers.
“We want companies like Hills and Dales to stay in the black and stay operational, because there aren’t a lot of options for people who need that higher level of service,” she said.