A massive tax package being pushed by Republicans who run the Iowa Senate is a burly thicket of a bill, weighing in at nearly 100 pages and containing so many complexities that anyone diving into its provisions may not be heard from again.
Some provisions of Senate Study Bill 3074 have received more attention than others. The bill’s drive to flatten Iowa personal income tax rates, with the goal of eventually eliminating income taxes, and to cut corporate income taxes have dominated media coverage. With good reason.
But Iowans are starting to learn more about another major piece of the Senate bill. Call it The Great Tax Swap. Even under the Golden Dome of Wisdom, it’s not entirely understood.
Basically, the bill raises the state sales tax by a penny to 7 cents on the dollar. Under a constitutional amendment approved by more than 60 percent of voters in 2010, three-eighths of that new penny would fill the Natural Resources and Outdoor Recreation Trust Fund. That could mean new money for outdoor recreation and water quality.
The extra cent would provide $235 million for the trust fund, according to the Department of Revenue. Several some environmental groups have registered in favor of the bill. Although we don’t yet know how much of this will be for new spending or will simply replace existing dollars.
But the Senate bill also eliminates the ability of cities and counties to collect voter-approved one-cent local-option sales taxes. Instead of a local tax, communities would receive money from the state collected through the higher state sales tax.
Communities that already have the tax, such as Cedar Rapids and Linn County cities, can continue to spend the state dollars on purposes approved by voters, such as street repairs. But eventually, when those referendums expire, all communities will be required to use 50 percent of state sales tax dollars they receive to reduce property taxes. Voters will have no say.
Of more than 1,300 taxing jurisdictions in Iowa, just 55 don’t collect a local-option sales tax. So the impact of this change is huge. LOST replacement payments to local governments would total $627 million in Fiscal Year 2023
Cities and counties are nervous. They saw what happened to backfill dollars the state promised to pay local governments in the wake of property tax cuts passed in 2013. The state ended the backfill. There’s no guarantee a future Legislature faced with a tight budget won’t do the same to sales tax payments. Not to mention what this means for local governments’ ability to issue bonds for infrastructure projects.
The city of Cedar Rapids and Linn County are registered against the bill.
Many of us have been waiting for the Natural Resources and Outdoor Recreation Trust Fund to be filled. State parks and conservation programs are woefully underfunded. Iowa’s dirty water is a major issue.
But the Senate bill changes the current formula for how trust fund dollars would be spent in several disappointing ways.
Just 18 percent of trust fund dollars would go to the Department of Natural Resources for the “Establishment, restoration or enhancement of state parks, preserves, forests, wildlife areas, habitats, native prairies and wetlands.”
Recreation projects will be evaluated, curiously, by the Iowa Economic Development Authority, not recreation professionals within the DNR. They must further Iowa’s economic development policy. And in a nod to the Farm Bureau, the bill discourages spending on expanding public lands.
The biggest single share of the money, 34 percent, goes to the Iowa Department of Agriculture for soil conservation and nonpoint source water protection. And the biggest chunk of those dollars will go to farmers and landowners for water quality improvement projects prescribed by the Nutrient Reduction Strategy.
This money will be spent in largely the same way current water quality dollars are spent, with payments to anonymous farmers and landowners with no requirement that anyone prove the tens of millions of dollars we’re spending are actually making water cleaner. There are still no requirements that farmers and landowners adopt minimum practices to keep polluted runoff out of waterways.
So the blank checks to agriculture will continue. There will just be more of them.
The bill spends a 15 percent share on DNR watershed protection programs, but some of that money also goes to the agriculture department. Ten percent will fund the Resource Protection and Enhancement Program, or REAP. A 10 percent share goes to lake and stream restoration and 9 percent flows into a Conservation Community Partnership Program for local projects, matched by local dollars.
There’s just a 4 percent share for water and land trails, less than half of what would be spent under the existing trust fund formula.
Then there’s the bill’s overall aim for creating a far more regressive tax structure, where wealthy Iowans will see considerable tax breaks and low-income Iowans will continue to pay a higher percentage of their income in state and local taxes. Using a sales tax to provide state funding to some well-off landowners and farmers upstream doesn’t look much like economic or environmental justice.
One group, the Iowa Environmental Council, remains undecided on the bill. Those concerns about economic justice and how trust fund dollars will be spent are among the group’s concerns. But at the same time, the council would like to see the trust fund filled.
“It is a very difficult place for us to be in,” said Alicia Vasto, water program associate director with the council.
It’s also possible none of this happens. Tax plans presented by Gov. Kim Reynolds and House Republicans contain no similar Great Tax Swaps. This could easily be the first item jettisoned in negotiations on a final tax bill.
So it may never be heard from again. Given its serious shortcomings, and without changes, that’s the right call.
www.thegazette.com
Some provisions of Senate Study Bill 3074 have received more attention than others. The bill’s drive to flatten Iowa personal income tax rates, with the goal of eventually eliminating income taxes, and to cut corporate income taxes have dominated media coverage. With good reason.
But Iowans are starting to learn more about another major piece of the Senate bill. Call it The Great Tax Swap. Even under the Golden Dome of Wisdom, it’s not entirely understood.
Basically, the bill raises the state sales tax by a penny to 7 cents on the dollar. Under a constitutional amendment approved by more than 60 percent of voters in 2010, three-eighths of that new penny would fill the Natural Resources and Outdoor Recreation Trust Fund. That could mean new money for outdoor recreation and water quality.
The extra cent would provide $235 million for the trust fund, according to the Department of Revenue. Several some environmental groups have registered in favor of the bill. Although we don’t yet know how much of this will be for new spending or will simply replace existing dollars.
But the Senate bill also eliminates the ability of cities and counties to collect voter-approved one-cent local-option sales taxes. Instead of a local tax, communities would receive money from the state collected through the higher state sales tax.
Communities that already have the tax, such as Cedar Rapids and Linn County cities, can continue to spend the state dollars on purposes approved by voters, such as street repairs. But eventually, when those referendums expire, all communities will be required to use 50 percent of state sales tax dollars they receive to reduce property taxes. Voters will have no say.
Of more than 1,300 taxing jurisdictions in Iowa, just 55 don’t collect a local-option sales tax. So the impact of this change is huge. LOST replacement payments to local governments would total $627 million in Fiscal Year 2023
Cities and counties are nervous. They saw what happened to backfill dollars the state promised to pay local governments in the wake of property tax cuts passed in 2013. The state ended the backfill. There’s no guarantee a future Legislature faced with a tight budget won’t do the same to sales tax payments. Not to mention what this means for local governments’ ability to issue bonds for infrastructure projects.
The city of Cedar Rapids and Linn County are registered against the bill.
Many of us have been waiting for the Natural Resources and Outdoor Recreation Trust Fund to be filled. State parks and conservation programs are woefully underfunded. Iowa’s dirty water is a major issue.
But the Senate bill changes the current formula for how trust fund dollars would be spent in several disappointing ways.
Just 18 percent of trust fund dollars would go to the Department of Natural Resources for the “Establishment, restoration or enhancement of state parks, preserves, forests, wildlife areas, habitats, native prairies and wetlands.”
Recreation projects will be evaluated, curiously, by the Iowa Economic Development Authority, not recreation professionals within the DNR. They must further Iowa’s economic development policy. And in a nod to the Farm Bureau, the bill discourages spending on expanding public lands.
The biggest single share of the money, 34 percent, goes to the Iowa Department of Agriculture for soil conservation and nonpoint source water protection. And the biggest chunk of those dollars will go to farmers and landowners for water quality improvement projects prescribed by the Nutrient Reduction Strategy.
This money will be spent in largely the same way current water quality dollars are spent, with payments to anonymous farmers and landowners with no requirement that anyone prove the tens of millions of dollars we’re spending are actually making water cleaner. There are still no requirements that farmers and landowners adopt minimum practices to keep polluted runoff out of waterways.
So the blank checks to agriculture will continue. There will just be more of them.
The bill spends a 15 percent share on DNR watershed protection programs, but some of that money also goes to the agriculture department. Ten percent will fund the Resource Protection and Enhancement Program, or REAP. A 10 percent share goes to lake and stream restoration and 9 percent flows into a Conservation Community Partnership Program for local projects, matched by local dollars.
There’s just a 4 percent share for water and land trails, less than half of what would be spent under the existing trust fund formula.
Then there’s the bill’s overall aim for creating a far more regressive tax structure, where wealthy Iowans will see considerable tax breaks and low-income Iowans will continue to pay a higher percentage of their income in state and local taxes. Using a sales tax to provide state funding to some well-off landowners and farmers upstream doesn’t look much like economic or environmental justice.
One group, the Iowa Environmental Council, remains undecided on the bill. Those concerns about economic justice and how trust fund dollars will be spent are among the group’s concerns. But at the same time, the council would like to see the trust fund filled.
“It is a very difficult place for us to be in,” said Alicia Vasto, water program associate director with the council.
It’s also possible none of this happens. Tax plans presented by Gov. Kim Reynolds and House Republicans contain no similar Great Tax Swaps. This could easily be the first item jettisoned in negotiations on a final tax bill.
So it may never be heard from again. Given its serious shortcomings, and without changes, that’s the right call.
Diving into the Iowa Senate GOP’s Great Tax Swap
Iowans are starting to learn more about another major piece of the Senate bill. Call it The Great Tax Swap.
www.thegazette.com
